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Eurozone slowdown mirrors UK’s weak start to 2018

Growth in the eurozone slowed in the first three months of 2018, as national data showed a sharp fall in demand for exports and consumer spending remained subdued.
The eurozone economy expanded by 0.4pc in the the first three months of 2018, down from 0.7pc in the three months to December, according to official statistics released on Wednesday.
The slowdown in the eurozone growth rate is the same as that seen in the UK, which also fell by 0.3 percentage points in the first three months of 2018.
Growth in the eurozone was slowing from a higher base, however. UK growth in the final three months of 2017 was 0.4pc, some 0.3 percentage points lower than in the Eurozone and the economy reached a virtual standstill in the three months to March, with a 0.1pc rate of expansion.
The UK economy is particularly exposed to falling demand from eurozone consumption. Some 43pc of UK exports went to the EU in 2016. Both economies are also likely to have been affected by poor weather and the timing of Easter this year.
Claus Vistesen of Pantheon Macroeconomics said the estimate of GDP growth for the Eurozone was better than some investors had feared. In fact, it was at odds with the other data that had so far emerged from 2018 so far.
“Either the GDP numbers will be revised down, or the first quarter hard data will be revised up,” Mr Vistesen said.
While temporary factors such as cold weather and flu had weighed on GDP growth this was not the sole cause, said Stephen Brown of Capital Economics.
“But there is no denying that underlying growth has slowed as last year’s boost from net trade has faded,” Mr Brown said.
Eurozone slowdown mirrors UK’s weak start to 2018

Mario Draghi, head of the ECB
Eurozone unemployment remained relatively high, and more than double that of the UK and the US rates of close to 4pc. Data released on Wednesday showed a figure of 8.5pc unemployment for March. This has not moved from February. 
There was also a very mixed picture on unemployment levels across the eurozone member states.  
Unemployment in Greece was at 20.6pc, more than six times that of Germany’s extremely low rate of 3.4pc. Spain still had a relatively high rate of 16.1pc unemployment, as of March, while Italy’s unemployment rate was unchanged at 11pc.
Eurozone slowdown mirrors UK’s weak start to 2018

Growth in the UK and eurozone economies slowed by 0.3 percentage points in the first three months of 2018, though the eurozone was slowing from a higher rate

Credit:
 Dario Pignatelli/Bloomberg
The different levels of unemployment, often regarded as a measure on the amount of slack in an economy may partly explain why inflationary pressures remain subdued in the currency bloc. 
Weak inflation and slower economic growth were noted by Mr Draghi last week.
Uncertainties generated by US trade tensions had also hit economic confidence, Mr Draghi said.
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