German economy is ‘firing on all cylinders’

THE German economy picked up speed in the first three months of the year, expanding at twice the pace of the UK and France amid higher spending and robust exports.

Europe’s largest economy grew by 0.6pc in the first quarter, following growth of 0.4pc in the final three months of 2016, according to Germany’s statistics office.

This is double the 0.3pc growth in the UK and three times the quarterly pace of expansion seen in the US in the first quarter.

Growth was led by higher investment and exports, while consumer spending also rose at a robust pace, Destatis said.

Stefan Schilbe, an economist at HSBC, said the German economy was firing on all cylinders. “The first quarter should have marked the beginning of a more sustained recovery of business 0.6pc fixed investment, especially if exports stay strong,” he said.

In a boost for incoming French president Emmanuel Macron, who takes office this weekend, separate data showed the number of French workers in the private sector rose for the eighth consecutive quarter to its highest level since the financial crisis in the first quarter of 2017.

Mr Macron has vowed to reduce the country’s unemployment rate to 7pc, from 10pc.

His victory in the presidential election against Marine le Pen last weekend triggered the biggest inflows into European equities since records began in 2002, according to analysis by Bank of America Merrill Lynch (Baml).

Ronan Carr, European equity strategist at Baml, said the $6.1bn in inflows would mark the beginning of an ongoing revival in European equities.

“Anecdotally our conversations with global, especially Us-based investors, suggest interest in European equities is just picking up,” he said. “Many are starting from a very low base.”