Berlin battles back to lift eurozone woe

GERMANY’S central bank yesterday said the country’s economy should stabilise in the second half of the year as the eurozone emerges from recession, writesHugo Duncan.

Official figures last week showed the Germany economy grew by 0.7pc between April and June – its strongest performance for more than a year.

It helped the 17-nation single currency bloc post growth of 0.3pc as its 18-month recession finally came to an end. The Bundesbank, Germany’s powerful central bank, yesterday said the region will benefit from record low interest rates in the coming months.

‘In the second half of 2013, economic growth in Germany is likely to return to normal and steady levels,’ it said in its monthly report.

But it added that the European Central Bank’s pledge to keep borrowing costs low does not rule out a hike in interest rates to keep a lid on higher inflation if prices start to rise too quickly. The improvement in the outlook in Germany – Europe’s largest economy – and the eurozone as a whole is a boost to British businesses as the recovery in the UK gathers pace.

Sir Martin Sorrell, chief executive of marketing giant WPP, said: ‘Say it quietly, but it looks a lot like the eurozone may be emerging from recession.’

The CBI yesterday raised its growth forecasts for Britain from 1pc to 1.2pc for this year and from 2pc to 2.3pc for 2014.

‘The economy has started to gain momentum and confidence is picking up, but it’s still early days,’ said CBI directorgeneral John Cridland.

It came as figures from around the world showed a mixed picture for the global economy. Japanese exports rose at the fastest pace in nearly three years in July but the Indian rupee slumped to a record low.