EY – Consumer & Retail Outlook: Insights from the European Economic Outlook, Mar 2026

The report focuses on household consumption and its implications for the retail sector in Europe.

It draws on the EY European Economic Outlook published in March 2026, incorporating updated macroeconomic assumptions and forecasts following the escalation of the Middle East conflict. Key findings include a temporary energy shock expected to cause a limited but noticeable drag on European economic activity, a projected rise in euro area inflation by around 0.5 percentage points in 2026, and a reduction in GDP by about 0.2%. The euro area GDP growth forecast for 2026 has been revised down from 1.3% to 1.0%, partly due to revisions related to Ireland. Inflation is expected to remain slightly above target in 2026 before falling below 2% in 2027. A more severe downside scenario involving a prolonged Middle East conflict is also considered. Labor markets stabilized but showed signs of cooling; consumption growth in Q4 2025 was positive but slow and uneven across countries.