ECB: Middle East war has stalled consumption in the euro area

The European Central Bank (ECB) says the war in the Middle East has dealt a clear blow to consumption across the euro area and warns that fresh geopolitical shocks could slow the economic recovery again.

Consumer confidence and spending show sharp weakening

In an ECB analysis covering the period from February to April 2026, the consumer confidence index fell by about 12 points — a decline the bank says is comparable in magnitude to the drop seen after the start of the war in Ukraine.

Nominal household consumption growth has also slowed. After averaging between 3 and 4 percent year‑on‑year from mid‑2024, growth fell to around 2.5 percent in April 2026.

The ECB’s breakdown attributes most of the decline to postponed purchases of non‑essential items. Spending on luxury clothing, footwear, sports equipment, travel and various leisure services was hit hardest. Higher‑income households cut back particularly on discretionary, delayable purchases as uncertainty rose, while lower‑income households — which spend a larger share of their budgets on food and housing — trimmed durable goods purchases and outlays on restaurants and cafés.

Energy is the only category where spending rose, driven largely by higher fuel and transport costs.

The bank also flags a psychological effect: in the April survey about 40 percent of respondents said they do not expect their incomes to fully offset the loss of purchasing power caused by inflation. If households come to believe their living standards will decline, they may save more and spend less — a behaviour that could further weaken the recovery in the euro area and slow growth in the coming period.

Separately, a Eurostat examination of purchasing power across Europe highlights that North Macedonia and Romania perform relatively well on one specific indicator.

Photo: press material from the event