Brussels, Belgium (4E) – Business confidence across the 18-nation euro area fell slightly in April, a reflection of rising tensions between the European Union and Russia over the issue of Moscow’s annexation of Ukraine’s Crimea region.
The headline Economic Sentiment Indicator (ESI), which gauges confidence in several business sectors and among consumers, fell to 102.0 in April from 102.5 in the previous month, its first decline since April 2013, according to the European Commission report released Tuesday. The result also surprised observers, with 16 economists surveyed by The Wall Street Journal last week forecast an increase to 103.0.
The drop in business confidence was broad based, with Germany, France, the Netherlands and Spain recording lower ESIs. Non-euro nations Poland and Romania also saw their ESI fell, and both countries share a border with Ukraine.
All five business sectors in the euro zone posted a drop in confidence.
Despite the decline, consumers continued to show a more upbeat outlook, boosted by an improved view of the labor market and the expectation of modest price increases in the coming months.