European recovery receives a boost by growth in Britain

The British economy grew at the fastest pace in four years
in the second quarter and German business confidence surged
to a three-year high this month, indicating Europe's recovery
may be stronger than forecast.

Britain's gross domestic product rose 1.1pc in the three months
through June, almost twice as fast as the gain predicted by
economists in a Bloomberg News survey, the Uk's Office for
National Statistics said in London yesterday.

In Munich, the closely watched Ifo institute said its business
climate index, based on a poll of 7,000 executives, jumped to
106.2 this month, confounding expectations of a decline.

The reports suggest two of Europe's largest economies are being
buoyed by slides in the pound and the euro just as factories
step up production to meet global demand.

"Europe is coming in relatively strong -- stronger than expected,"
said Laurent Bilke, an economist at Nomura International. But
"it's unlikely we'll sustain this level for long".

The euro rose against the dollar to top $1.29 before easing back
to $1.2847, while sterling surged 1pc to $1.5420.

"The latest data are reducing the risk of double-dip recession,"
European Central Bank Executive Board member Jose Manuel
Gonzalez-Paramo said. "The first indicators for July, for
example, are quite positive."

Gabriel Stein, analyst at Lombard Street Research in London,
said: "The German economy is likely to have seen exceptionally
strong growth in the second quarter, which probably will continue
in the third; but further out, prospects look less stellar.