Eurozone growth and inflation surge, adding to pressure on ECB

Growth in the eurozone accelerated, inflation rose towards the ECB's key target and unemployment fell to a seven-year low as the bloc's economy shrugged off uncertainty over Brexit and US President Donald Trump.

The EU's Eurostat statistics agency said growth in the eurozone sped up in the fourth quarter of 2016 to 0.5 per cent, beating analysts' estimates.

The data meant that the eurozone economy grew by 1.7 per cent in 2016, exceeding the United States which gained 1.6 per cent last year.

Faster growth came on a spike in consumer demand in France and Spain while Germany's export-driven economy remained on a solid course.
 

Inflation in the eurozone meanwhile jumped to 1.8 per cent in January, a big leap from 1.1 per cent a month earlier.

That will put pressure on the European Central Bank to scale back its controversial stimulus measures as it nears its stated target figure of inflation below but close to 2.0 per cent.

EU Economic Affairs Commissioner Pierre Moscovici cautioned that the solid growth data still fell short of a full recovery.

"The recovery is solid for the fifth year running... But it is still too weak to create all the jobs we need," Moscovici said.

Moscovici, a former French finance minister, also insisted that the inflation data were shy of the objectives set out by the ECB when it embarked on its stimulus programme.

Eurostat also said that the eurozone jobless rate fell to its lowest level since May 2009 in December.

Unemployment in the 19-nation eurozone fell to a lower-than-expected 9.6 per cent in the last month of 2016, with big drops in Spain and Portugal, where joblessness has remained high since the crisis.

During the worst of the debt crisis, unemployment in the single currency bloc peaked at 12.1 per cent.

Improvement since then has been painfully slow, with the economy way off of the 7.5-percent jobless rate seen before the 2007-08 financial crash.

Youth unemployment in the eurozone still stood at a very high 20.9 per cent, though this was lower than the 21.8 per cent posted a year earlier.

The fall in unemployment will add to the growing list of arguments out of powerful Germany that the ECB should put a stop to its massive stimulus programme as early as possible.