German growth spurt surprises analysts

Germany yesterday surprised analysts across Europe with new figures showing that its economy grew by 1.5 per cent during the first quarter of the year, twice the rate predicted by forecasters.

The unexpected spurt in growth appears to have been something of a one-off, with a spike in corporate investment in machinery and construction the biggest factor in the expansion. A period of mild winter weather boosted construction in particular, though the German government said consumer spending had also been stronger than expected, partly as a result of falling unemployment.

Germany's strong performance in the first three months of the year – its best growth figures for more than a decade – follows several years of improving sentiment in the European Union's largest economy since the recession of the early years of the century. Improvements in manufacturing efficiency have helped Germany to continue benefiting from rising emerging market demand.

However, economists warned that the good times were likely to be shortlived in the face of a declining environment across the EU.

Germany's stellar performance, as well as better-than-expected figures from France, helped the eurozone's economy as a whole to grow by 0.7 per cent in the first quarter, well ahead of forecasts.

Jean-Claude Trichet, president of the European Central Bank, who has been criticised in some EU countries for refusing to heed calls for interest-rate cuts, said: "At the moment I am speaking, we are vindicated in our analysis of a resilience, a very significant resilience in the first quarter, and then we will see some kind of slowing down."