Eurozone economic growth data prompts political clash

The government and Labour have clashed over data showing that the eurozone is growing faster than the UK economy.

The 17-nation eurozone bloc grew 0.8% in the first three months of 2011, with Germany expanding 1.5% and France 1%.

Labour's shadow chancellor Ed Balls seized on the figures as proof that the UK was now in the economic "slow lane" with growth of 0.5% in the same period.

But a spokesman for the Prime Minister said it was "good news" that Britain's big export partners were growing.

The strength of the economic data for the 17 countries that use the euro surprised some economists and included a strong 0.8% growth rate from debt-laden Greece.

Mr Balls said: "These figures expose how, since George Osborne's spending review and VAT rise, Britain's economy has gone from the economic fast lane to the slow lane.

Faster-growing Germany and France are the more natural economies for Britain to compare ourselves with than the crisis-hit southern European countries.

In more usual circumstances, I suspect that George Osborne would agree.

But rightly or wrongly, the chancellor is focussed now on Britain's fiscal challenges, which are definitely not as grave as Greece or the Republic of Ireland's but do have more in common with Spain than with Germany.

"As our economy has flatlined with zero growth over the last six months countries like France, Belgium, the Netherlands and even Spain have overtaken us while Germany is powering ahead."

He said that, like the UK, all these major economies were hit by the global financial crisis and must reduce their deficits.

"But while they are now growing strongly, our recovery has been choked off," Mr Balls said.

But the Prime Minister's spokesman said the UK had the largest deficit in the EU with unprecedented public and personal debt, and a banking crisis.

He said: "We have a lot of work to do to rebalance our economy and get it going again, we should welcome the growth in France and Germany."

France and Germany had broader economic bases and were less reliant on a single sector of the economy, he said.

A Treasury spokesman added: "The government is having to deal with a deficit four times bigger than Germany's. Our banking bust was matched only by [the Republic of] Ireland. Our housing bust second only to Spain's.

"But despite this, UK homeowners and small businesses are benefiting from the same low interest rates as in Germany and France."