Eurozone companies remain optimistic as the European Central Bank is expected to pause interest rate cuts to observe the impact of tariffs
The European Central Bank's survey shows that although Eurozone companies are optimistic about future development, they face profit pressures due to trade tensions. In the survey, 8% of companies reported revenue growth, and 23% of companies are optimistic about the next quarter. Companies are generally concerned about supply chain delays and need to find alternative suppliers. Despite the risks posed by U.S. tariff policies, the European Central Bank may maintain interest rates this week and postpone rate cuts
According to the Zhitong Finance APP, a survey released by the European Central Bank on Monday shows that Eurozone companies remain optimistic about their development prospects, but are also facing pressure on profits, partly due to trade tensions. In its quarterly survey report on corporate financing channels, the European Central Bank stated that 8% of companies reported an increase in turnover over the past three months, while another 23% expressed optimism about their development in the coming quarter. However, the profit situation for businesses continues to deteriorate, with small and medium-sized enterprises being more widely affected.
In recent years, economic growth in the Eurozone has been relatively slow, as the anticipated economic recovery has not materialized, but companies maintain a high level of hiring as they remain confident about future improvements.
The European Central Bank noted, "Most companies indicated that they have been affected to some extent by trade tensions, with exporters to the United States and manufacturing companies being the most severely impacted."
About 30% of companies expressed concerns about delays or shortages in their supply chains, and businesses indicated a need to seek alternative suppliers. The European Central Bank added, "To adapt to the changing trade environment, the main strategies include shifting sales focus to domestic and EU markets and readjusting supply chains."
The European Central Bank pointed out that while long-term inflation expectations have not changed, companies have revised their price increase expectations for the coming year down from 2.9% to 2.5%.
In this context, despite the economic risks posed by U.S. President Trump's tariff policies, the European Central Bank may choose to remain on hold this week, leaving potential rate cut measures for later. At Thursday's (the last decision-making meeting before the seven-week summer recess) meeting, policymakers are likely to keep interest rates unchanged at 2%, postponing responses to Trump's 30% threatening tariffs until the policy is implemented and its effects can be assessed
