Europe gets the jitters as confidence crumbles in the face of global turmoil
Confidence in the Eurozone remains on shaky foundations as the EU’s official monitor of economic sentiment crumbled for a third consecutive month, feeding fears of a continent-wide slowdown.
Both business and consumer jitters dragged the Economic Sentiment Indicator down from a score of 103.9 in February to 103.0 in March, its lowest level in 13 months. Economists pointed to turmoil in the financial markets, a slowdown in China and geopolitical tensions as reasons for the slide.
Jennifer McKeown, senior European economist at Capital Economics, said the slip was a “disappointment” which “supports other evidence that the region’s slow recovery is losing pace”.
Howard Archer, chief economist at IHS Global Insight, warned businesses will become "more cautious in their employment and investment plans and that consumers will be more reluctant to spend”.
Some, however, were less gloomy.
Anna Zabrodzka, an economist at Moody’s Analytics, pointed to the fact that a score of 103.0 still indicates the economy is on track to expand. The Eurozone is also blessed by reduced energy prices which, should lead to “improved purchasing power of households” and increased investment by firms, Zabrodzka said.
Britain, along with other non-Eurozone countries such as Poland, bucked the trend, with confidence surging from 105.0 to 106.0 in the UK – the largest rise, aside from Luxembourg and Finland, in the entire EU.