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Eurozone spending slows as exports increase

European Central Bank

New figures have shown that domestic spending across the Eurozone has slowed, but healthy export sales have protected it from stagnating.

It is expected that the poor performance will encourage the European Central Bank to provide further support to the economy.

Figures found that Eurozone exports increased by 1.1 per cent during the second quarter of 2016, after a period of stagnation in the first three months of the year.

However, this was offset by lacklustre investment also slowed, government spending and stockpiles of goods also struggled across the quarter.

Speaking to the Guardian, Karen Ward, chief European economist at HSBC, suggested that a level of uncertainty surrounding the 19-member trading group was affecting investment and spending.

She said: "Investment is likely to remain lacklustre due to weak global trade and political uncertainty including Brexit. So the second half of the year is likely to be sluggish."

The result was that the overall growth rate was 0.3 per cent, and the European Central Bank is expected to introduce further measures to help the economy and encourage domestic spending.

However, in a press conference, European Central Bank chief Mario Draghi said the slight downgrades to its growth and inflation expectations were "not so substantial to warrant a decision to act".

It was expected that the Bank may look to expand its quantitative easing programme, but Mr Draghi said the current plan would continue until "at least" March 2017.

Overall, the economy growth across the Eurozone of 0.3 per cent was in line with preliminary estimates and noted an increase of 1.6 per cent over the same period in 2015. According to economists, the rest of the year will be fairly tough for businesses and household spending.

Brexit has had an undisputable impact on the European economy and the willingness of people to invest, but there are other factors such as a series of high-profile terrorist incidents and the refugee crisis that have also encouraged uncertainty.​