An economic recovery in France, formerly one of Europe’s chief laggards, has helped a resurgent eurozone power to its strongest growth in a decade and outpace the U.S. last year.

The European Union’s statistics agency Tuesday said gross domestic product—the broadest measure of the goods and services produced by the eurozone’s 19 member countries—was 2.5% higher in 2017 than in 2016, the fastest growth rate since 2007.

That growth was buoyed by France’s turnaround, where businesses say they are shaking off long-held economic fears as French President Emmanuel Macron takes his first steps to cut red tape and taxes.

Fueled by a strong election win and a scattered opposition, Mr. Macron has quickly taken a series of decisive steps to change the economy and reached out to businesses to shake up France’s image as a place that discourages innovation.

The Macron government cautions it is too soon to judge the effectiveness of sweeping labor overhauls the president signed in September. But new figures showed the economy accelerated in 2017, growing by 1.9% to record its strongest year since 2011, signaling a potential end to half a decade of French inertia that has kept unemployment close to 10% and held back the broader European recovery.