We get a flood of EU GDP reports today. Germany’s figure, just out, has marginally exceeded forecasts with quarterly growth of 0.8 percent but France is underperforming again and stagnated in the first three months of the year, missing estimates of 0.2 percent growth.
Robust German growth has been driven largely by domestic demand, which could help its European peers with their exports. Where all that leaves the overall euro zone figure, due later, remains to be seen. The bloc is predicted to have expanded by 0.4 percent.
Spain has already come in with 0.4 percent quarterly growth and others could pick up too so once again France is looking like one of the sicker men of Europe. High debtors Italy and Portugal are expected to eke out at least some growth.
To compound France’s problems a public sector strike has been called by the hardline FO labour union over civil service pay freezes – a reminder of the difficulties of enacting economic reform.
The silver lining is the absence of pressure from the markets with borrowing costs for many euro zone countries at record lows. France will sell 7-8 billion euros of fixed-rate, medium-term bonds and 1.0-1.5 billion euros of inflation-linked bonds later.