German business morale weakened for a second straight month in June, suggesting concerns about the Greek debt crisis are hitting the mood in corporate boardrooms across Europe's largest economy. But as David Pollard reports, a pick-up in corporate profit margins and strong household spending boosted French growth in the first quarter.
France as foreign tourists don't like to see her. International links at Calais at a standstill through strikes - this time by ferry workers earlier this week. But is a new image emerging - of an economy in comeback mode? It grew at twice the speed of Britain or Germany in the first quarter. Though Germany: it's doing OK too, says Schroders' Alix Stewart. Despite a slowdown in its key IFO reading. SOUNDBITE (English) ALIX STEWART, FUND MANAGER, SCHRODERS, SAYING: ''Euro zone GDP and a lot of the indicators have surprised people to the upside generally, this year. These things don't go in a completely straight line. We had decent data out of France this morning - that's been one of the laggards in Europe. So I think all in all, it's looking quite supportive, given where we were just six months ago.'' Even if Germany's IFO slowed for the second straight month. Its business climate index below forecasts. The German economy in reasonable shape, but sentiment taking a hit - from Athens' will-it won't it Grexit crisis. Many Germans now want Greece firmly 'out' of the euro. Stewart sees their point. SOUNDBITE (English) ALIX STEWART, FUND MANAGER, SCHRODERS, SAYING: ''Longer-term, if you can believe that the euro can look stronger without Greece, and that everybody else sort of closes the door behind them and bolts it, you could see longer-term an argument for why it's better for Europe.'' The French numbers bolster hopes, says the finance minister, for one per cent growth this year. For the first quarter, GDP rose in line with a previous estimate. Corporate profit margins were at their highest in four years. Topping 30 per cent thanks to a cut in payroll tax. Could France's much-derided reform programme not be so laughable after all? SOUNDBITE (English) ALIX STEWART, FUND MANAGER, SCHRODERS, SAYING: ''France was actually trying to do the tax rather than the cut version of improving their deficit, which didn't seem to work. So it could just be that you're looking at Italy and France being a bit of the laggards and catching up a bit later, so you would expect to see their growth being a little bit stronger at this stage.'' The strike also saw a surge in desperate migrants trying to board lorries stuck at Calais. Britain and its economy the usual destination of choice. Who knows, perhaps that's about to change - France more tempting after all.