by Leigh Thomas and Zuzanna Szymanska
PARIS, March 29 (Reuters) – Household confidence has fallen sharply in France and Germany, more than expected, in the face of rising inflation and the war in Ukraine, despite government support measures, indicators show monthly published Tuesday by Insee and the GfK institute.
“In February, hopes were still high that consumer sentiment would pick up as the (COVID-19) pandemic restrictions eased. However, the war in Ukraine dashed those hopes,” said Rolf Bürkl, researcher at GfK, in a statement.
German consumer sentiment fell to -15.5 points for the month of April, its lowest level since February 2021, from -8.5 points (revised) in March, the GfK institute survey shows, conducted with approximately 2,000 Germans.
Economists polled by Reuters on average expected -14.0 points.
In France, household confidence fell from 97 to 91 points in February, its worst level since February 2021 as well, according to the monthly INSEE survey. Economists polled by Reuters expected an average of 94 points.
“A fall of this magnitude is rare,” BNP Paribas analysts note in a note, according to which the largest monthly declines were recorded during the 1993 recession or the 2020 containment.
This result also goes against the trend of improvement usually seen before presidential elections, when there is optimism that a political change will translate into an improvement in living standards.
MORALE AT HALF
Ahead of elections next month, the French government has put in place a package of measures worth 25 billion euros to mitigate the effects of rising energy prices and inflation.
But that did little to ease inflation fears: the proportion of households anticipating an acceleration in price increases climbed 50 points to reach its highest level since the start of the INSEE survey. in 1972.
In Germany, the ruling coalition last week adopted a second package of measures worth 17 billion euros to curb rising electricity, heating and fuel costs.
The deterioration in household confidence is far from being limited to France and Germany.
According to the “flash” estimate published on Wednesday, consumer sentiment in the euro zone collapsed in March to 18.7 points, touching its lowest level since the start of the coronavirus crisis in April and May 2020.
Italy, the eurozone’s third-largest economy, also saw a bigger-than-expected decline in household confidence in March, the National Statistics Office said last week.
In March, the confidence of Belgian households, penalized by the war in Ukraine, recorded its biggest drop since the start of the survey in 1985, while that of Dutch households reached its lowest level in 9 years. (Report Leigh Thomas in Paris and Zuzanna Szymanska in Berlin, with contributions from Phillip Blenkinsop in Brussels and Bart Meijer in Amsterdam, French version Anait Miridzhanian, edited by Jean-Stéphane Brosse)