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Germany grew by 1.5% and France by 1% in the first quarter – compared to Britain’s 0.5% Growth in the German and French economies has surged thanks to strong business investment and consumer spending, in the latest sign that the UK is failing to keep pace with other developed countries. Germany, Europe’s largest economy, grew by 1.5% in the first three months of the year, smashing all analysts’ forecasts, while France, Europe’s second-biggest economy, expanded by 1%, also better than expected. This compares with UK growth of just 0.5% , following a drop of the same size in the fourth quarter of 2010, which prompted a warning from government statisticians that underlying growth was broadly flat. Germany and France, which together account for nearly half of the eurozone’s GDP, grew by 0.4% and 0.3% respectively in the fourth quarter. Germany has enjoyed a rapid recovery from its worst recession since the second world war and has clawed back lost ground, with GDP now at the level it was at before the financial crisis. In contrast, the UK economy remains smaller than before the downturn began, and the latest Bank of England forecasts suggest that Britain’s economy will not reach its pre-recession size until the second quarter of 2012. This sluggish growth rate prompted governor Mervyn King to warn that some of the output lost in the downturn will probably never be recovered. Investment, construction and consumer spending were the main areas of growth in Germany, the German statistics office said, while trade contributed to growth at slightly slower rate. Germany could expand by 3% or more this year, according to Wolfgang Franz, a top economic adviser to the government. Britain, though, is expected to grow by just 1.7%. “Those are fantastic figures yet again,” said Christian Schulz from Berenberg Bank. “Investments look to have given a boost to the economy. Consumption will, however, become more and more the engine of growth in the future.” In France, business investment jumped by 1.9% between January and March while household spending, a major engine of the French economy, was up 0.6%, according to data from the INSEE statistics office. However, there are fears that this is the high point. “This is likely as good as it gets, as we expect growth to slow to more moderate rates in coming quarters,” said Joost Beaumont at ABN Amro. “The recent surge in oil prices is likely to erode household purchasing power, while also eating into company profits, leaving its mark on consumption and investment. Furthermore, we expect fiscal retrenchment to increasingly come to the fore, while less vigorous global economic growth will weigh on exports.” Spain’s economy, though, grew by just 0.3% in the first quarter of the year. Economic growth (GDP) Economics Global economy France Europe Germany Europe Julia Kollewe guardian.co.uk