European spending drops as trade tensions hit consumer wallets
According to first estimates released by Eurostat on Monday, the seasonally adjusted volume of retail trade decreased by 0.7% in the eurozone and by 0.8% across the EU in May, compared to April.
The decline aligns with economists' forecasts but marks the sharpest drop since August 2023.
The setback follows a modest rebound in April, when sales rose by 0.3% in the eurozone and by 0.8% in the wider European Union.
On an annual basis, eurozone retail sales growth slowed from 2.7% in April to just 1.8% in May — the weakest expansion since July 2024.
Sector breakdown and national trends
Across the eurozone, all major retail sectors experienced contraction. Sales of food, drinks and tobacco fell by 0.7%, while non-food products — excluding automotive fuel — declined by 0.6%.
Automotive fuel sales dropped the most, falling by 1.3% in specialised stores.
In the broader EU, the declines were similarly spread, with food and beverage sales down 0.8%, non-food products dropping by 0.7%, and automotive fuel dipping 1.2%.
Among EU member states, the most severe monthly contractions were seen in Sweden (-4.6%), Belgium (-2.5%) and Estonia (-2.2%). Meanwhile, Portugal (+2.1%), Bulgaria (+2.0%) and Cyprus (+1.0%) posted the strongest increases.
Markets stay cautious as investors watch US trade moves
European equity markets remained largely flat on Monday.
The blue-chip Euro STOXX 50 hovered near 5,300 points, while the broader STOXX 600 was unchanged at 541, as investors awaited clarity on the direction of US trade policy.
The euro edged down 0.3% to $1.1730, while yields on 10-year German Bunds held steady at around 2.57%.
President Donald Trump is expected to issue a new wave of tariff warning letters later on Monday, targeting countries with trade surpluses with the United States.
While the list of recipients remains undisclosed, Commerce Secretary Howard Lutnick confirmed that the "Liberation Day" tariff package originally scheduled for 9 July would now take effect on 1 August.
Trump's administration had previously imposed a 20% import tax on EU-manufactured goods in April, but quickly reduced the rate to 10% as financial markets plummeted.
However, a separate deadline to reach an agreement with the European Union before tariffs rise as high as 50% has now been set for Wednesday.
So far, only China, the United Kingdom and Vietnam have managed to secure temporary exemptions through deals with Washington.
Trump has warned that any country aligning with the 'anti-American policies' of the BRICS bloc will face an additional 10% tariff — with no exceptions.
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Euronews
2 hours ago
- Euronews
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In February 2025, the UK government updated their alcohol duty rates and ended a temporary concession on wine that had been in place since 1 August 2023. The reprieve had been an 18-month-long move to help wine producers adjust to a new way of calculating alcohol duties. Namely, tariffs are now calculated by alcohol strength (ABV), rather than volume. This could be seen as a gentle push for consumers to more closely consider the strength of what they're drinking, and it aligns with a wider, societal trend towards moderating consumption. 'This approach is supported by public health experts including clinical advisors to the Department of Health and Social Care,' HM Treasury told Euronews. In 2024, the UK wine market, including fortified wine, was worth around £12.3 billion (€14.3bn), according to data from the Wine and Spirit Trade Association (WSTA). Although the UK does produce some wine domestically, it only accounts for around 1% of consumption by volume — roughly 12-15 million bottles per year. As such, the country relies heavily on imports to feed wine habits. Just over five months after the end of the government's grace period, how is the new duty system affecting the alcohol industry in Europe? And what knock-on effect has it had on consumer pricing? Are the UK's new rules affecting European wine producers? The end of the reprieve in the UK has meant that wine with an alcohol strength of 11.5-14.5% ABV will no longer be charged one flat duty rate as if it were 12.5% ABV. Whilst this means that the duty on 11.5-12.4% wine is cheaper, the duty on wines at 12.5-14.5% has increased. Taking into account the Retail Price Index (RPI) uprating, a bottle of 13% wine now pays £2.88 (€3.34) in tax, 21p more than before 1 February. 13.5% wine pays £2.99 (€3.46), 32p more. 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For example, medium to low alcohol white wines in the 10-11.5% ABV category, such as Muscadet, Soave and Pinot Grigio often come from cooler regions like France, Northern Italy and Germany. Wines with an ABV of 13.5-15% are those most affected by the end of the wine reprieve and typically come from warmer climates like Spain and southern Italy, as well as further afield, like Argentina, USA and Australia. This category includes wines such as Grenache (Garnacha), Shiraz (Syrah) and US Chardonnay. Some Californian reds have even become famous for being over 15% ABV. The wineries themselves are not responsible for paying the alcohol duty; that falls to the importers. While it's too soon to have concrete data on producer sales, the long term effect is predicted to manifest in numerous ways. Freddie Long, export manager at Spain's Long Wines, told Euronews that he expects a decrease in sales for high-alcohol Spanish red wines this year. 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