German growth spurs recovery

GERMAN business confidence rose to the highest in 33 months and French consumer spending unexpectedly increased, suggesting an economic recovery in the 12 nations sharing the euro is gaining strength.

The benchmark indicator of western German business optimism, based on a survey of 7,000 companies, climbed to 95.7 from a revised 94.3 in October, according to the Munich-based Ifo institute.

In France, consumer spending on manufactured goods rose 1.6% in October, the second monthly increase.

The $8 trillion economy of the euro region grew 0.4% in the third quarter, rebounding from a contraction in the previous three months. Accelerating growth in the US and Asia has boosted demand for European exports and outweighed the euro’s ascent to a record against the dollar.

Bolstering the outlook for faster growth, Germany and France yesterday won extra time to reduce their budget deficits. Both countries said the additional spending cuts demanded by the European Commission would risk hobbling the region’s economic recovery.

Germany’s economy grew 0.2% in the third quarter.

The country’s benchmark DAX stock index has surged 68% from a seven-year low in March and is on course for its first annual gain since 1999.

The US economy, which buys almost a fifth of euro-region exports, grew at an annualised 8.2% in the third quarter, the Commerce Department said.