European consumers keep on ignoring politics as confidence improves for fifth month in a row

Jasper Jolly
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Eurozone consumers continue to spend, ignoring background noise of political risk (Source: Getty)

Consumers in the Eurozone continue to ignore the looming political risks in the bloc, with confidence improving for the fifth month in a row.

The European Commission’s measure of consumer confidence rose to a negative score of 4.9. The broader EU measure was slightly higher, at minus 4.3 points.

While the confidence measure is negative, it is still significantly above long-term averages.

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Confidence fell sharply last year after the UK’s referendum on leaving the EU to hit August lows of a negative 8.5 score. Since then the measure has increased steadily to its highest point since early 2015.

Political events threaten to knock this steadily improving morale. Elections will take place in France, the Netherlands and Germany over the next eight months, with anti-euro candidates expected to mount major challenges in each.

Any electoral result which endangers the euro would cause a big market shock throughout Europe and the world.

Howard Archer, chief UK and Europe economist at IHS Markit, said: “It remains highly possible that consumer confidence in the Eurozone will be increasingly pressurized by increasing political uncertainty over the coming months.”

Read more: The year of the vampire: 2017 is when political risk bites back

Economic growth has started to show signs of a sustainable recovery in growth, as well as strong increases in headline inflation figures.

As in Britain, continued consumer spending has been a large part of the increased health in the economy.

Economic policymakers will watch signs of a slowdown in consumer confidence, and any consequent effect on spending. The European Central Bank has said it remains committed to accommodative monetary policy.

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