Eurozone private sector growth almost stalled this month, a key survey showed on Tuesday, adding to evidence that the bloc is already feeling economic fallout from the U.S. and Israeli war with Iran, with inflation rising and growth slowing.
“The economic hit from higher energy prices could be felt very quickly,” Jack Allen-Reynolds at Capital Economics said. “Based on our working assumptions for energy prices, we suspect that the economy will stagnate rather than contract, but there are clearly risks in both directions.”
Interest rates are rising amid expectations of further European Central Bank rate increases to curb inflation, pushing some mortgage rates higher and denting disposable incomes.
Meanwhile, petrol prices have risen by more than 10% across the EU, while diesel is up over 20%. Even if the war ends relatively soon, prices are unlikely to fall quickly, as some energy infrastructure has been damaged and fuel bottlenecks may take several months to resolve.
The S&P Global flash eurozone Composite Purchasing Managers’ Index fell to a 10-month low of 50.5 in March, down from 51.9 in February, as the war drove input costs to their highest in more than three years and triggered the worst supply chain disruptions since mid-2022.
“The flash eurozone PMI is ringing stagflation alarm bells as the war in the Middle East drives prices sharply higher while stifling growth,” said Chris Williamson, chief business economist at S&P Global Market Intelligence.
The fall in the PMI comes as German figures held up relatively well, while other major economies took a bigger hit, including France, where business confidence tumbled.
Separate data released a day earlier showed consumer confidence in the bloc falling to its lowest level since late 2023, marking one of the steepest declines on record and dropping well below its long-term average as economic pressures weigh on households.
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Authorities in France are reporting that about 20 people have died over the weekend while swimming in unsupervised areas of rivers, lakes and coastal waters as they tried to escape the heatwave.
A widespread heatwave swept across much of Europe, pushing temperatures close to 40°C and triggering red alerts, transport disruption and growing pressure on health systems, infrastructure and wildlife during the summer solstice period.
Start your day informed with the AnewZ Morning Brief. Here are the top stories for 20 June, covering the latest developments you need to know.
A severe heatwave sweeping across much of Europe has led France to restrict alcohol consumption at public events, while Germany issued widespread heat warnings and Spain closed a football fan zone in Madrid.
At least thirteen people have died and sixty-six have been injured following an explosion at Qatar's main liquefied natural gas (LNG) processing hub at Ras Laffan, authorities said on Sunday.
Tehran has agreed to let the International Atomic Energy Agency (IAEA) recommence inspections of its nuclear programme, U.S. Vice President JD Vance has said. The U.S. and Iran have settled on a 60-day roadmap aimed at reaching a final deal, according to mediators Qatar and Pakistan.
Armenia and Azerbaijan have agreed on a landmark internet deal that will allow traffic to pass through Azerbaijani networks.It's the latest deal to highlight the ongoing peace process between the two countries.
A Ukrainian strike has damaged a school building in a Russian-controlled area of Ukraine’s Zaporizhzhia region, according to local authorities cited by the TASS news agency. No injuries were reported in the incident.
Three students have been killed and at least seven injured after two of their peers opened fire in a high school in the Philippines, police said. A spokesperson for the police said the two suspects, aged 14 and 15, had been arrested and a police pistol confiscated. Bullying is a possible motive.
North Korean leader Kim Jong Un has ordered the construction of two new 5,000-tonne warships every year over the next five years, signalling one of the country’s most ambitious naval expansion plans to date.
Google-owned YouTube has settled a lawsuit brought by a teenage plaintiff who claimed the platform harmed his mental health, avoiding what would have been the second California trial over allegations that social media companies fuel youth addiction.
The U.S. Supreme Court on Tuesday declined to allow a Rastafarian inmate to pursue a damages claim against Louisiana prison officials who forcibly shaved his head in alleged violation of his religious beliefs, ruling that federal law does not permit such lawsuits against individual officers.
Russia has accused the United States of failing to follow through on what Moscow describes as “understandings” reached between Presidents Vladimir Putin and Donald Trump during their Alaska summit last year, in a sign of mounting frustration in the Kremlin.
Bangladesh has called for increased climate financing and faster delivery of support to vulnerable nations, arguing that current global funding commitments fall far short of what developing countries need to tackle the growing impacts of climate change.
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