Fears the Eurozone economy is already in recession as confidence plummets

Analysts believe the euro-zone economy may already be in recession after consumer and business confidence slumped in September.

The European Commission’s economic sentiment indicator fell 3.6 points to 93.7 in the euro-zone and 3.5 points to 92.6 in the EU as a whole.

It fell sharply in the eurozone’s largest economies, most notably in Germany, where it fell 4.8 points from August.

It also fell in the Netherlands (-3.7), Italy (-3.7), France (-3.2), Poland (-2.4) and Spain (-1.0).

After a breather over the summer, selling price expectations in the industrial, retail, services and construction sectors have risen again, pointing to further inflation.

In Ireland, overall economic sentiment remained unchanged in August, although consumer and retail sentiment softened.

The latest Bank of Ireland Economic Pulse Survey, which feeds the EU survey, found a third of people were just barely making ends meet in September, rising to 53 per cent for low-income households.

It showed consumer confidence has fallen to an all-time low as households faced soaring utility bills and mortgage repayments, and people grew gloomier about their personal finances, as well as the economy and job prospects.

“The eurozone economy is slowing rapidly as high prices reduce business activity and dampen consumer demand,” said Bert Colijn, a senior eurozone economist at ING Bank.

“We assume that a recession could therefore already have begun.”

The EU survey shows that industry confidence fell for the seventh straight month (-1.8) as managers’ output expectations and actual order books declined.

Services confidence slipped 2.7 points, while consumer confidence fell 3.5 points to a new all-time low.

Expectations in retail and construction were also down, with builders reporting ongoing labor and supply shortages.

Confidence among financial service providers, which is not included in the overall EU indicator, fell by 5.1 points in September.

The Paris-based Organization for Economic Co-operation and Development predicted this week that the euro zone will grow just 0.3 percent next year as Germany enters a recession.

Despite the expected slowdown in growth, Latvian and Lithuanian members of the European Central Bank are aiming for more big rate hikes in October as inflation continues to hit new highs.

Meanwhile, the Bank of England was forced to step in to reassure UK bond markets after last week’s untold mini-budget caused sterling to fall against the dollar. The OECD expects the UK economy to stagnate next year.

https://www.independent.ie/business/world/fears-eurozone-economy-already-in-recession-as-confidence-drops-42026658.html Fears the Eurozone economy is already in recession as confidence plummets

Fry Electronics Team

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