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Survey finds Europeans fear economic slowdown
21
Apr '16
During the first quarter of 2016, the Syrian war as an ongoing cause of the refugee crisis, the terrorist threat in Europe, Great Britain's possible exit from the EU and the continued recession in major developing countries weakened the consumer climate and, in particular, the economic and income expectations of European consumers, says a study by GfK Consumer Climate Europe. Between December 2015 and March 2016, the consumer climate for the EU fell by 3.2 points to 9 points.

Economic expectations remained static in Germany in the first quarter of 2016, in spite of the country's good economic situation. The indicator stood at 0.5 points in March, just slightly above its long-term average of 0 points. This represents a modest drop of 1.4 points in comparison with December of last year. However, the extent by which the indicator has fallen in the last few months can be seen by comparing it with the level reached in March 2015, when economic expectations reached 36.8 points.

In contrast, income expectations remain at a very high level. In March, the indicator stood at 50.5 points, representing a loss of just 0.3 points in comparison with December. What's more, at 53.1 points, it was only very slightly higher this time last year. The Germans therefore still believe that wages and salaries will continue to increase significantly this year. The extent to which these hopes are justified will be demonstrated by the upcoming collective bargaining processes for groups of workers such as public employees.

Standing at exactly 50 points, propensity to buy was also still very high in March. The Germans seem to believe that now is currently the right time to spend money on expensive products and services.

While the indicator was only 1 point lower in December of last year, it has fallen by 13 points in comparison with March 2015.

In Great Britain especially, the referendum due to take place in June on the country's possible exit from the European Union is casting a shadow of doubt on the future. Numerous economic experts as well as many British consumers are predicting strong negative economic consequences should a so-called Brexit come to pass.

The economic expectations of the British fell further during the first quarter of the year. The indicator stood at 2.1 points in March, just slightly above its long-term average of 0 points. This represents a loss of 14.5 points since December, and a staggering drop of 25.8 points in comparison with March 2015. This trend is in stark contrast with the country's actual level of economic growth, which last year increased by between 1.8 and 3.0 per cent in comparison with the respective previous quarter. One reason for the rather pessimistic underlying mood among consumers could be the referendum due to take place in June about whether Great Britain should leave or remain in the EU. Many consumers feel irritated, and seem to fear there could be negative repercussions for the domestic economy should the referendum lead to a so-called Brexit.

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