Fuel woes hit Europe Source: CNNfn Publication date: 2000-10-04

LONDON (CNNfn) - The fuel crisis that gripped Europe last month spooked consumers, who made fewer retail purchases, and crimped business in the service sector, data in Britain and France showed Wednesday. British retail sales volume in September grew by the slowest annual rate for 17 months, the Confederation of British Industry reported.

"The fuel crisis clearly had an impact as deliveries failed to arrive and shoppers stayed at home," Alastair Eperon, chairman of the British employers' group's distributive trades panel, said in a statement.

"However, the full effect of the blockade remains uncertain. It is likely that some but not all of the lost sales will have been recovered in subsequent weeks," he added.

Orders placed with suppliers, on the other hand, exceeded August's growth.

British and French protesters almost brought traffic across the two countries to a complete halt last month as they blockaded refineries and roads to express their outrage at oil prices hitting 10-year highs. Oil pumps went dry, stifling economic activity. Similar protests also hit most other European Union countries including Belgium, Germany, and Spain.

Business in Britain's key service sector retreated to 55.0 in September from 58.3 in August. A figure above 50 indicates expansion. Economists had been expecting 57.9, the Chartered Institute of Purchasing and Supply said.

The London Chamber of Commerce estimated at the time that the protests cost British business #250 million ($352 million) per day, based on the estimate that 10 percent of the country's daily economic output was lost.

French consumer confidence plunges

In France, a measure of consumer confidence in September slumped by the largest fall in five years to minus 8, compared with 2 in July, the national statistics institutes INSEE said Wednesday. Data is not compiled in August, when many French are on holiday.

The 10-point drop wiped out over a year of steadily rising confidence.

"I was placed for a negative number but minus 8 is a shocker," Adolf Rosenstock, economist at Nomura International, told Reuters.

"France is basically a linchpin for the European economy. People thought oil would hurt growth, but not that much. This is a wake up call -- consumer spending must be watched all over Europe," he said.

Oil crisis seen cutting euro zone growth

Economists said the report confirmed that the 10-year highs oil prices hit in September were likely to stilt domestic demand and shave around 0.5 percent of growth in the 11-nation region in 2000.

"It certainly raises the risks to growth in 2001. It puts a question mark on euro-zone consumer confidence," said Peter Saacke, euro-zone economist at Merrill Lynch.

But economists said that growth in France, the euro-zone's second largest economy, could still manage to reach 3.5 percent this year, and tax cuts due to take effect in October should improve sentiment.

Putting the fall in perspective, economists said that the French index had only climbed out of the red in April for the first time since INSEE began its consumer surveys in 1987.

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-- Martin Thompson (mthom1927@aol.com), October 05, 2000

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Figures. I'm only surprised that the damage wasn't greater.

-- Uncle Fred (dogboy45@bigfoot.com), October 05, 2000.