The European Central Bank said in an article published Monday in its economic bulletin that household spending in the Eurozone fell sharply during the first weeks of the Iran war, with consumer confidence declining, suggesting that any further escalation of the conflict could cast a shadow over consumer spending again.
Consumer confidence in the eurozone plummeted after the outbreak of war, before recovering slightly later. Nevertheless, it remained well below pre-war levels, undermining overall economic growth that has been weak for years.
The bank said the decline in consumption in April was at a similar level to the households' reaction to the Russian war in Ukraine in early 2022.
After nominal consumption growth averaged between 3% and 4% since mid-2024, it slowed to around 2.5% year-on-year in April, driven by high-income households cutting back on spending on luxury goods.
