What's going on?
Data released on Tuesday showed the eurozone economy appearing to stumble in the third quarter, growing at only half the rate expected.
What does this mean?
Growth in the 19 countries that make up the eurozone was just 0.2%, down from 0.4% in the second quarter of the year – and the slowest rate in four years. And growth across all 28 countries that make up the European Union (EU) (i.e. including countries that don’t use the euro as currency, like the UK and Sweden) fell to 0.3%, down from 0.5%.
Europe’s biggest workhorse, Germany, got stuck in traffic with new emissions standards smothering auto businesses like Volkswagen and BMW, and Chinese buyers ordering fewer German cars. In Italy, the economy didn’t grow at all for the first time in four years. The eurozone’s third-largest economy is currently wrangling with the EU over its debt-riddled budget. Zero growth makes that budget look very optimistic, although the Italian government claims it’s simply proof that more spending is needed to kickstart growth in the country.
Why should I care?
The bigger picture: Ça plane pour France.
The second-largest eurozone economy, France, picked up some slack in the third quarter. Although below forecasts, Gaulish growth sped up in comparison to the second quarter, partly thanks to strong consumer spending (a bit like America). French business spending increased slightly, too.
For markets: Staying the course.
Consumer confidence and business confidence are down all across Europe. If people and businesses are worried about the future, they’re likely to spend and invest less. Less money circulating in the economy could throw yet more cold water on growth going forward – but it seems like the European Central Bank is still set on removing its economic training wheels through next year, seeing Tuesday’s figures as merely a blip.