France posted its fastest economic growth rate in two years in the first three months of 2015 but Germany slowed from the robust pace it rattled along at late last year. David Pollard looks at what's behind the change of fortunes.
Star quality. Not something seen in the French economy recently. But is it recovering some of its glitz? Here they're getting ready for the Cannes Film Festival. No doubt hoping for a blockbuster. They might have to look further afield, says James Bevan of CCLA Investment Management. SOUNDBITE (English) JAMES BEVAN, CHIEF FINANCIAL OFFICER, CCLA INVESTMENT MANAGEMENT, SAYING: ''I don't see signs of solid growth across the euro zone. I see beacons of real hope of progress, so for example I would see Spain being able to deliver growth ordinarily much better than expectations, perhaps just close to three percentage points, surprising many people who believe they would be in the same position as Greece However, I believe France over the long haul will really suffer in terms of its competitiveness and growth prospects.'' Even so, French growth is at its fastest in two years. Today's first-quarter numbers are higher than expected. Suggesting the government's own projection for one per cent this year or more could be bettered. Though not by enough to dent a double-digit unemployment rate. And is Germany losing some of its box-office appeal? Europe's largest economy disappointed forecasts - despite strong domestic consumption. SOUNDBITE (English) JAMES BEVAN, CHIEF FINANCIAL OFFICER, CCLA INVESTMENT MANAGEMENT, SAYING: ''Euro zone has benefitted from a weak currency, from low food price inflation, low energy costs, but inevitably the German economy, which is much more dependent on exports, has been held back by a very weak global environment.'' Like France with its stronger consumer spending, investment and output, Italy also beat forecasts. ECB fans say it's another sign of success for QE. But that's easy to over-state, says Bevan. And as for Italy: still more horror than thriller. SOUNDBITE (English) JAMES BEVAN, CHIEF FINANCIAL OFFICER, CCLA INVESTMENT MANAGEMENT, SAYING: ''Do you know, with Italy, we are grateful for small mercies. The Italian growth numbers are still dire in the context of what that economy needs in terms to pay off its debt and to generate rising living standards.'' Signs of progress, then, as the euro zone posts a 0.4 per cent quarterly rise in GDP - if not on a roll quite yet.