ATHENS: Eurozone consumers appear undaunted by the threat of a Greek debt default and exit from the currency area, as the leading measure of confidence steadied in June following two straight months of decline.
The European Commission said Monday the headline sentiment measure from its monthly sentiment survey was unchanged at minus 5.6 in June. The measure remains above the levels observed in the years since the financial crisis. Rising consumer spending towards the end of last year helped drive a modest pickup in eurozone economic growth. That acceleration owed much to falling energy prices, which left households with more money to spend on goods and services produced within the currency area.
Energy prices have begun to pick up a little from their lows earlier in the year, but there are some signs that household spending can withstand those increases. Figures released last week showed pay growth in the eurozone accelerated sharply during the first three months of 2015.
Nevertheless, a sustained decline in consumer confidence as a result of a Greek departure from the currency area would threaten the recovery. The weaker euro hasn’t proved a game changer for eurozone exporters, and trade was a drag on the economy in the first quarter. If household spending were to weaken, that would leave the recovery reliant on an increase in government spending and business investment. But the latter would also be hit by a Greek default and exit.
