Euro zone consumer confidence falls in July as morale weakens post-Brexit

Consumer confidence in the euro area fell during the month of July, following the fallout after Brexit that shocked financial markets, reigning in fresh signs of weaker morale that is capable of hampering economic growth over the coming months.

Euro zone consumer confidence decreased 0.7 points to -7.9 in July, from an upwardly revised -7.2 in June. The June figure was previously estimated at -7.3, the European Commission’s flash estimate showed Wednesday.

A Reuters poll of economists had estimated a decline of 7.3 percent in July. Moreover, the marked drop in July follows a slight fall in June and two consecutive rises in April and May.

The figures for the European Union as a whole showed a much worse drop of 1.8 points to -7.6, a level not seen in two years. The indicator for the bloc as a whole is now below the euro zone indicator for the first time in years.

In a separate report released Tuesday, the European Commission (EC) cut its eurozone growth forecast to between 1.5 percent and 1.6 percent this year from 1.7 percent previously, and to between 1.3 percent and 1.5 percent in 2017.

"While uncertainty is expected to diminish over time, forthcoming changes in the economic and political relationships between the UK and member states could have a longer lasting impact on the medium to long-term economic outlook," the report mentioned.

Meanwhile, the estimates released by the EC, came in line with the downward trend already witnessed in Germany when the Mannheim-based ZEW institute said Tuesday that its economic sentiment index sank to -6.8 points in July from 19.2 in June.