A surprise return to growth for the German and French economies has lead some to hope for a Europe-wide recovery to follow. The unexpected 0.3 percent rise in GDP in both Germany and France gave financial markets a much needed boost. The news may help German Chancellor Angela Merkel as it comes just weeks before voters head for the polls.Government stimulus packages and a hike in household spending appear to have driven the improvement in the two economies. Christian Dreger,from the Institute for Economic Research said: “The recession is apparently over. We are seeing a phase of stabilisation in production and it’s even possible the third quarter will rise more than the second quarter. Overall, I think we can look at this as there being a modest recovery ahead of us.” But some have said the swing is merely technical. A weaker euro and a drop in interest rates both helped and any rally must be set against four previous quarters of economic contraction – one factor fueling caution among some analysts: “We have an improvement in the second quarter over the first quarter,” said Benoit de Broissia from KBL Richelieu. “That being said, we shouldn’t forget that the second quarter of 2009 showed a diminution compared to the second quarter of 2008 so we still have a negative annual growth.” GDP may have grown but it’s the jobless figures which are a key economic barometer and they often take longer to respond. The pundits say if companies lay people off this autumn, the loss of disposable income could hit consumption.
Germany and France climb out of recession