FRANKFURT – The latest drop in economic sentiment is a major concern, suggesting the eurozone economy could suffer a massive hit from Russia’s war against Ukraine, according to European Central Bank chief economist Phillip Lane.
In an interview with POLITICO Monday, Lane pointed to “quite significant and substantial” drops in sentiment indices both for consumers and companies, calling them a “major concern” for ECB policymakers. Last week, eurozone consumer sentiment posted the second sharpest decline on record, while companies’ output expectations collapsed.
Front and center is surging inflation, which Lane summed up bluntly. “Europe may have to get used to higher prices,” he said, but added that most inflation will “fade away.”