Eurozone growth slows as Brexit dangers threaten

Growth in the eurozone halved in the second quarter, official data showed on Friday, with analysts warning that the consequences of Brexit could harm the economy further later in the year.
The Eurostat statistics agency said economic growth in the 19-nation single currency bloc slowed to 0.3 percent in the April to June period, with stagnation in France largely contributing to the poor data.
This was down from a far more robust expansion of 0.6 percent in the previous quarter, though analysts had said that result was due to a surprisingly warm winter in Europe.
The latest figures were in line with forecasts of analysts surveyed by data company Factset, and meant the eurozone grew by 1.6 percent over 12 months.
The period covered by the gross domestic product (GDP) data largely pre-dates the shock vote in late June by non-euro Britain, which the European Central Bank warned would negatively influence growth in Europe for years to come.
Signals so far are that economic activity in the eurozone is proving resilient despite the vote, after strong initial shocks rocked the financial markets.
"The good news is that the economy still has some momentum, though there is little acceleration to be expected as long as the Brexit story continues to inject some uncertainty into the external environment," said Peter Vanden Houte, chief economist at ING Bank in Brussels.
Looking ahead, "the third quarter started on a good footing, but it is probably too soon to start downplaying the potential negative impact of Brexit on eurozone growth," he added.
In the eurozone, Spain managed to grow a solid 0.7 percent despite political deadlock since inconclusive elections last December.
But French growth ground to a halt in the April-June period, a disappointing result for the eurozone's second-biggest economy.
Eurostat also announced that eurozone consumer prices rose 0.2 percent in July after a gain of 0.1 percent in June as the single currency bloc edged further away from the dangers of deflation.
"The inflation data is likely to be the start of a more sustained pick-up in price rises," said Jack Allen, European economist at Capital Economics.
The ECB last week refrained from adding more monetary stimulus to boost consumer prices in the eurozone, disappointing markets.
Slow eurozone growth has seen inflation slide in and out of negative territory, threatening a dangerous downward spiral of falling prices and wages. The ECB aims to get inflation back to its long-term target of two percent or just below, a level it deems healthy for growth.
Eurozone unemployment meanwhile was unchanged at 10.1 percent in June compared with May, but down from 11 percent in June 2015, Eurostat said.
The agency said GDP growth for the EU's 28 member states as a whole stood at 0.4 percent, for a year-on-year gain of 1.8 percent.
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