The FINANCIAL — 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. Between December 2015 and March 2016, the consumer climate for the EU28 fell by 3.2 points to 9 points.
During the first quarter of the year, a number of wide-ranging topics dominated discussions in the media and among the general public. Although the Islamic State lost some of the territory it had captured, the Syrian war is far from over, meaning that the cause of the huge influx of refugees remains. Initially, people were flocking unimpeded towards Central and Western Europe until the Visegrad countries decided to close their borders and consequently the Balkan route at the start of March. Although this put a stop to the flood of refugees migrating through Europe, people in need of help are now being placed in reception centers in Greece. In France, the government ordered soldiers to clear the illegal refugee camp in Calais known as “The Jungle”, where people hoping to travel to Great Britain had been camping. Meanwhile, political discussions continued into how Europe can accommodate the huge of quantity of refugees, and distribute them fairly across the member states.
As reflected in the attacks in Brussels in mid-March, the terror threat continued to be extremely high in Europe during the first three months of the year. However, since the explosions in Belgium did not occur until after March’s consumer climate survey was complete, the event did not feed into the results.
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.
Moreover, in the first quarter of 2016, it became clear that major developing countries such as China, Brazil and Russia continue to find themselves in a period of economic weakness. This is diminishing the export prospects of European businesses, and may be having a negative effect on the economy.
This variety of issues caused considerable uncertainty among European consumers in the first quarter of the year. In particular, economic expectations have declined significantly since December in almost all the countries considered. In Greece, for example, they reverted to the same level as was recorded during the most difficult periods of the debt crisis. The drop in economic expectations additionally affected people’s income expectations, which also suffered very considerable losses in the majority of countries. The GfK consumer climate for the EU 28 also fell significantly during the first quarter – from 12.2 points in December to 9 points in March.
Discussion about this post