European Union consumer confidence fell much more than the eurozone morale in July, the European Commission said on Wednesday, in a sign that the British vote to leave the European Union may affect the currency bloc less than the countries outside it. The Commission's flash estimate showed euro zone consumer morale decreased by 0.7 points to -7.9 in July from an upwardly revised -7.2 in June, in a drop less steep than market expectations of a fall to -8.0, according to Reuters forecasts.
"It is encouraging that the first post-Brexit sentiment release showed only a moderate decline" in euro zone confidence, said Marco Protopapa, economist at J.P. Morgan. The figures for the European Union as a whole showed a much worse drop of 1.8 points to -7.6, a level not seen in two years.
This confirms gloomier post-Brexit growth forecasts for the EU than for the euro zone, published by the Commission on Tuesday. The Commission does not release country-by-country figures in its consumer confidence indicator. Although less than the EU, the euro zone confidence worsened, confirming the post-Brexit vote downward confidence trend already seen on Tuesday in Germany, the main economy of the bloc, when the Mannheim-based ZEW institute said its economic sentiment index sank to -6.8 points in July from 19.2 in June.
"The clear dip in Eurozone consumer confidence in July reinforces belief that the Brexit vote will have some dampening impact on Eurozone economic activity," said Howard Archer, economist at IHS Global Insight. "On the positive side, for now at least, the fundamentals still look pretty solid for consumers in the Eurozone with negligible inflation supporting purchasing power and labour markets significantly improved overall," he added.