Eurozone business optimism at lowest ebb since 2014 as political risks intensify

Eurozone business confidence has deteriorated to the lowest since late-2014, according to the latest Markit Business Outlook survey.

Conducted 13-29 June, with the majority of responses collected prior to the UK’s referendum on EU membership, the survey showed the percentage of respondents expecting to see their business activity levels rise over the coming year outnumbered those expecting a decline by 31%, but that’s down from a net balance of 37% earlier in the year and the lowest since October 2014.

Optimism waned in all of the four largest euro member countries. France once again recording the lowest degree of confidence in the outlook while Spanish firms were the most upbeat.

By far the most widely cited threat to business growth in the coming year across all euro area countries surveyed was the departure of the UK from the European Union, a source of instability that also caused optimism to fall to a four-year low in the accompanying UK Business Outlook Survey. Outside of the UK, firms in Ireland were the most concerned, with some 45% of survey respondents citing Brexit as a key threat to their future prospects.

However, political uncertainty extended beyond Brexit. Widespread concerns about political stability in Italy, Germany, France and especially Spain were evident in the survey responses relating to key threats. Worries about the US presidential election outcome were also commonly recorded.