Britain's vote to quit the European Union continued to undermine eurozone business and consumer confidence in August, analysts said after worse-than-expected official figures on Tuesday. The Economic Sentiment Indicator (ESI) for the 19-nation eurozone compiled by the European Commission fell one full point to 103.5 in August. For the full 28-member European Union, the ESI was down 0.9 points from July at 103.8, holding above the boom-bust line of 100 points.
Analysts said the report was disappointing and below forecasts as uncertainties about how Brexit will play out continued to dampen sentiment. Howard Archer at IHS Markit said the "marked dip in overall business and consumer confidence fuels concerns that the downside risks to the eurozone growth outlook have been aggravated by the UK's Brexit vote." For his part, Jack Allen of Capital Economics said in "the decline in the ESI ... left the index below the consensus forecast and at its lowest level in six months." Allen said the report "showed a broad-based decline in sentiment," with growth set to slow to just 0.1 or 0.2 percent in the three months to September compared with a gain of 0.3 percent in the second quarter. On this showing, the European Central Bank will have to take additional economic stimulus measures at its next meeting on September 8, he added.
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