Europe is still spending its way back to health

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People in their underwear pick up two pieces of clothes for free inside a clothing store in Madrid June 21, 2012. A clothing brand marked the start of sales in Madrid by offering the first 100 customers clothes for free as long as they showed up in their underwear.

REUTERS/Andrea Comas

Spanish brand Desigual runs events where people who show up in their underwear get a discount, like this woman at its Madrid store.

Europe's recovery continues to be driven by people spending spare cash at the shops.

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Eurostat latest retail sales figures show growth beat expectations last month, as retail sales grew by 2.2% in May compared to the same time last year. That's higher than the 2% rise economists had forecast.

May's sales figure was also 0.7% higher than the previous month's. April saw a 0.6% month-on-month fall in sales.

Retail sales are one of the strongest points of the eurozone's nascent recovery. Over the last few months, both Spanish and German sales have risen at the fastest pace in a decade.

At the start of the year it looked like Europe might fall into its third recession in 7 years, but now the bloc is seeing what may be its first genuine recovery since the financial crisis.

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