Eurozone Consumer Confidence Falls in March 2025
Eurozone consumer confidence in March 2025 weakened as looming trade tariffs raised concerns over growth and inflation. Consumer confidence in the eurozone fell to -14.5 points in March from -13.6 in February.
The data, collected between March 1 and 20, reflects growing concerns among consumers about the strength of the recovery and external risks, including the potential inflationary effects from higher tariffs.
European Central Bank President Christine Lagarde told the European Parliament that higher US tariffs could shave as much as 0.5% points off eurozone growth.
The US is set to impose reciprocal tariffs on European goods as early as April 2, with the EU’s countermeasures delayed until mid-April.
At the same time, the ECB stated that inflation will also surge by 0.5% from 2,75% to 2.8%, exceeding its 2% target will impact consumer’s purchasing power in the Euro area.
Market Reactions to Weaken Eurozone Consumer Confidence
The euro, on March 21, fell 0.5% to $1.0820 after two consecutive weeks of gains.
Euro area sovereign bond yields fell, with German 10-year Bund yields slipping 2 basis points to roughly 2.8%. Also, the STOXX 50 index fell 0.8%, while the broader STOXX 600 lost 0.6%.
Shares of Companies such as the International Airlines Group and Ryanair Holdings plc fell 2.8% and 2.3%, respectively. Lufthansa AG and Easyjet plc were down by 2% and 1%, respectively.
Reasons Why Eurozone Consumer Confidence Fell in March
The decline in Eurozone consumer confidence in March 2025 can be attributed to several key factors.
For instance, economic uncertainty & weak growth in Germany is a key factor. Germany, being the largest economy in the Eurozone, influences overall economic sentiment across the Eurozone. The Ifo Institute revised Germany’s 2025 economic growth forecast down to just 0.2%, citing sluggish consumer demand and low business investment as significant concerns. Germany’s upper house of parliament, the Bundesrat, approved a €500 billion infrastructure spending package and eased borrowing restrictions on defence spending. Despite spending approval, the fear is that it may spur inflation across the Eurozone.
Another concern is the fear of recession. Some economists warn that parts of the Eurozone could still face recessionary pressures in 2025 due to weak domestic demand. As a result, businesses remain reluctant to invest, affecting job creation and wage growth expectations, dampening economic confidence.
In addition, ongoing geopolitical tensions, particularly in Eastern Europe and the Middle East, have impacted economic sentiment. The worry is that these uncertainties will lead to higher oil and gas prices, sluggish export demand, and supply chain disruptions.
