The European economy saw a slight improvement at the beginning of the year, with 0.3% growth in the January-March quarter compared to the previous quarter. This was the strongest performance since the third quarter of 2022 for the 20-country eurozone, which had been experiencing shrinkage in the last two quarters of 2023. The easing of inflation pressures on consumers and signs of life in the German economy, the largest in Europe, contributed to this growth.
The European Central Bank’s high interest rates have raised costs for businesses and consumers despite falling energy prices and dropping inflation to 2.4% in April. Inflation is nearing the bank’s goal of 2%, leading some to suggest that it may cut its benchmark rate from the current 4% in June. Germany, which saw economic growth of only 0.2% in the first quarter after shrinking at the end of last year, still faces long-term issues such as excessive bureaucracy, a shortage of skilled workers, and lagging digital technology adoption.
France reported only 0.2% growth while Spain was one of
