Euro-Area Economic Confidence Drops as Brexit Shock Sinks In

Euro-area economic confidence worsened more than analysts predicted in August in a sign that the reverberations of Britain’s decision to leave the European Union may finally be reaching companies and households.

An index of industry and consumer confidence fell to 103.5 from a revised 104.5, the European Commission in Brussels said on Tuesday. That compares with a median estimate of 104.1 in a Bloomberg survey of economists, and follows an unexpected increase in July.

With European Central Bank President Mario Draghi leaving it largely to economic data to fine-tune policy expectations before next week’s Governing Council meeting, the release provides a case for more stimulus to sustain the recovery and revive inflation. The International Monetary Fund has already cut its forecast for euro-area growth next year on the back of the U.K.’s Brexit vote, and the ECB will release new projections next week.


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