The German economic juggernaut helped the eurozone economy to grow much faster than expected in the first quarter, data revealed yesterday, prompting speculation that the European Central Bank (ECB) would raise interest rates above 4 per cent.

Despite the biggest increase in VAT in the country’s history in January, German GDP expanded by a solid 0.5 per cent in the three months to March, stronger than forecast.

Disappointing figures for France put pressure on Nicolas Sarkozy, who becomes the country’s President today, to build on his promise to shock the economy on to a faster track.

The 13-member eurozone reported growth of 0.6 per cent over the first quarter and 3.1 per cent year-on-year, in statistics published by Eurostat. That still marked a slowdown from the previous quarter, when growth was 0.9 per cent on the quarter and 3.3 per cent year-on-year, but it marked a faster rate of growth than in the United States.

A quarter-point rate rise by the ECB to 4 per cent in June was seen already by analysts as a done deal. Yesterday’s numbers spurred talk that rates could climb even higher.

The data suggested that the continental economy had taken in its stride the increase in Germany’s VAT rate from 16 to 19 per cent, a stronger euro against the dollar and a slowdown in the United States.

France did less well than hoped, with growth of 0.5 per cent, unchanged from the previous quarter. This compared with 0.8 per cent forecast by the Bank of France.

The data undermined the claim by Thierry Breton, the French Finance Minister, that economic momentum had picked up and that growth would be 2.5 to 3 per cent this year. Growth of around 2 per cent is now forecast.

Results for the other big eurozone economies were mixed.

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