Eurozone escapes recession as France, Spain, Germany and Italy beat growth forecasts – business live | Business

Anglo American’s chairman, Stuart Chambers, has assured shareholders over the company’s future resilience days after rejecting the £31bn takeover proposal from larger rival BHP.

He told shareholders gathered for the company’s Annual General Meeting in London today that the board had unanimously agreed to oppose BHP’s “opportunistic” approach in the “clearest terms” because it undervalued the company.

When questioned by one shareholder, Chambers said the UK’s takeover code meant the board would be unable to elaborate on its decision beyond the statement it released on Friday.

“But I will be meeting with shareholders and listening very carefully, particularly [to] the larger ones in the top 30 of the register, to hear what they feel,” Chambers said.

He added:

“The board doesn’t buy or sell the company – the shareholders decide.”

The Eurozone economy exited stagnation “with a bang rather than a whimper”, says Moody’s Analytics’ senior economist Kamil Kovar.

Kovar says the “almost normal above-consensus growth of 0.3%” could encourage the European Central Bank to take cautious approach to interest rate cuts:

This confirms that 2024 will mark the long-postponed recovery in euro zone.

However, it was not all cheers, with details showing some weakness beneath the strong headline figure: consumptions was still weak in many places, and only strong construction, driven by warm weather, and increase in net exports ensured the strong number. Still, the ECB hawks will point to the strong GDP number as argument that ECB can take its rates lower gradually.

A June cut will still occur, but a further cut in July just became bit more unlikely.”

Although 0.3% quarterly growth isn’t exactly stellar, it’s the eurozone’s strongest quarterly growth since the third quarter of 2022, early in Europe’s energy crisis.

Bert Colijn, ING’s senior eurozone economist, says the eurozone economy has clearly entered a better phase with economic recovery, low unemployment and more moderate inflation.

Lower energy prices, following the surge in oil and gas after Russia’s invasion of Ukraine in 2022, are helping the economy.

Colijn explains:

The economy is profiting from a more stable energy supply, with costs having substantially eased, resulting in lower inflation. Wage growth, in turn, has accelerated to make up for lost purchasing power, which is currently benefiting consumers.

We have yet to get the details, but judging from what’s happening in France, we see that household consumption led the way

The eurozone is set to grow faster this year than in 2023, predicts Sam Miley, managing economist at the Centre for Economics and Business Research:

This morning’s confirmation of quarterly growth in Q1 has put an end to a short-lived recession in the Eurozone, with the economy having turned a corner since the beginning of 2024.

Prospects are likely to improve further throughout the year, driven by the expectation of interest rate cuts. Further data released this morning showed that inflation has now stood within one percentage point of target for seven consecutive months, suggesting a suitable environment for the European Central Bank to consider adopting looser monetary policy.

Such policy changes will support growth this year. Cebr expects the Eurozone economy to expand by 0.6% in 2024, up from 2023’s growth figure of 0.4%.

Inflation across the eurozone was unchanged in April.

Eurostat reports that consumer price inflation was 2.4% per year, matching March’s reading.

Services inflation did slow, to 3.7% from 4% in March, but food, alcohol & tobacco inflation picked up to 2.8% from 2.6%.

Non-energy industrial goods prices rose by 0.9%, down from 1.1%.

Energy has less of a deflationary effect, though, with prices down by 0.6% year-on-year, from -1.8% in March.

Disappointingly, core inflation fell by less than expected. Inflation, stripping out energy, food, alcohol & tobacco, fell to 2.7% per year in April, down from 2.9%, but ahead of forecasts of a larger fall to 2.6%.

NEWSFLASH: The eurozone has escaped recession, and beaten forecasts for growth at the start of this year.

GDP across the eurozone expanded by 0.3% in January-March, statistics body Eurostat reports.

This means the eurozone’s shallow recession is over – its GDP shrank by 0.1% in both the third and fourth quarters of last year, which was a technical recession.

Eurozone growth has been held back by high interest rates, as the European Central Bank has battled inflation, while the cost of living crisis hit consumer spending.

Euro area GDP was lifted by stronger-than-expected growth in Germany, France, Italy and Spain (as we’ve been blogging since early this morning).

The wider European Union also grew by 0.3%.

Eurostat says:

Ireland (+1.1%) recorded the highest increase compared to the previous quarter, followed by Latvia, Lithuania and Hungary (all +0.8%).

Sweden (-0.1%) was the only Member State that recorded a decrease compared to the previous quarter. The year on year growth rates were positive for nine countries and negative for four.

France got the day off to a good start by reporting growth of 0.2% – which was hailed by its economy minister – before Spain posted a sizzling 0.7% growth. Germany then matched France, with 0.2% growth, while Italy expanded its GDP by 0.3%.

In the UK, mortgage approvals are at their highest level since the chaos of Liz Truss’s mini-budget.

New Bank of England data show that lenders approved 61,300 in March, up from 60,500 in February, which is the highest total since September 2022.

There was also some relief for borrowers; the ‘effective’ interest rate – which is the actual interest paid – on newly drawn mortgages decreased by 17 basis points, to 4.73% in March.