Consumer confidence falls in EU

25 July 2012

BRUSSELS: Consumer confidence in the European Union has fallen to its lowest level for almost three years, reflecting the economic travails prevalent throughout much of the region.

According to a survey conducted by the European Commission, the barometer of popular sentiment across its 24 member states dropped to -20.3 points in July, compared with -19.7 points in June.

Within the eurozone, comprising 17 nations including France, Germany, Greece, Italy and Spain, figures contracted to -21.6 points, which can be measured against the -19.8 points returned one month earlier.

Scores from the single currency area in July were thus considerably behind the long term average, calculated from 1990, of -12.8 points, and constituted the worst performance since August 2009.

Separate polls of analysts by Bloomberg and Dow Jones, the information providers, had estimated that the eurozone total would come in at -20 points.

"We suspect that the weakening in confidence was pretty widespread in July," Howard Archer, an economist at IHS Global Insight, told Dow Jones Newswires.

McDonald's, the fast-food chain, saw its organic sales rise by 3.8% in Europe during the last quarter, but believes the on-going instability is causing major problems.

"I think now, that it's persistent for so long, and especially in Europe, it's gotten so much deeper in some of these countries that it is really starting to constrain consumer behaviour."

"People are staying at home, they aren't going out and the magnitude of the issues in Europe are having ripple effects around the world."

Coca-Cola, the soft drinks giant, recently reported that its European volume sales were down 4% quarter on quarter in the last three months, and by 2% for the year to date, partly due to bad weather.

"I do believe that probably there was some factors, one-off factors that created the current result," Muhtar Kent, its CEO, said. "But I do also believe that I think you need to understand that we're in for a very protracted recovery in Europe."

Earlier this week, Moody's, the ratings agency, also lowered the outlook for Germany, Luxembourg and the Netherlands, all triple A-rated economies, from "stable" to "negative", as they look set to "bear the main financial burden" of propping up the eurozone.

Data sourced from European Commission, Dow Jones Newswires, Seeking Alpha, Bloomberg, Financial Times; additional content by Warc staff