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Eurozone GDP Grows Twice Faster Than UK

UK’s growth rate is the lowest of the G7 club of large and developed economies.UK’s growth rate is the lowest of the G7 club of large and developed economies.

The eurozone economy confirmed a robust expansion in the second quarter of the year, growing twice as much as Britain for the second consecutive quarter, preliminary estimates released by the European Union’s statistics agency showed.

Most analysts expect further subdued British growth in the second half of 2017 too as consumers continue to feel the squeeze from higher prices and firms hold back from investment due to uncertainty about post-Brexit trade arrangements, news outlets reported.

Eurostat said second-quarter GDP was up 2.1% compared with a year earlier, the fastest growth since 2011 and in line with forecasts by economists in a Reuters poll.

Eurostat’s “flash” estimate for growth in the 19-member single currency bloc was 0.6%, double the 0.3% estimate for the UK from the Office for National Statistics last week.

Eurostat’s estimates showed a slowdown of industry inflation also in its core indicator that excludes volatile energy prices, with a year-on-year 2.2% rise in June after a 2.4% increase in May a 2.6% rise in April.

The 2.5% increase in producer prices was largely due to rises of 2.9% both for intermediate goods and in the energy sector.

In equities, mining stocks weighed down the FTSE in London as Rio Tinto, and Antofagasta lost 2.9% and 1.6%, while Glencore International, and BHP Billiton dropped 1.2% and 1.1% each.

The lowest unemployment rates were in the Czech Republic at 2.9% and Germany at 3.8%.

Meanwhile Commerzbank and Deutsche Bank were off 1.7% and 1.1%. They were followed by aerospace and defense company Safran, IT and staffing company Cap Gemini, and airplane manufacturer Airbus Group, which lost 1.8%, 1.7%, and 1.4% respectively.

In May industrial prices went down by 0.3% on the month, slightly less than the 0.4% fall previously estimated by Eurostat.

Many economists had predicted a recession in UK. But a jump in inflation, stemming from the 13% slump in the value of the pound in the wake of the referendum, has dampened consumer spending this year, and pushed the UK’s growth rate to the lowest of the G7 club of large and developed economies, BBC reported.

Most analysts expect further subdued UK growth in the second half of 2017 too as consumers continue to feel the squeeze from higher prices and firms hold back from investment due to uncertainty about post-Brexit trade arrangements.

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