Why Greeks Remain Europe’s Most Pessimistic Consumers

They say markets are, above all, a matter of psychology — and that is precisely where a new study by the European Central Bank (ECB) focuses its attention.

Prompted by a sharp deterioration in economic sentiment across the eurozone, ECB economists examined the effects of geopolitical risks on consumer expectations. Their findings shed light on a mechanism that is particularly familiar to Greek consumers: households that have lived through repeated economic crises react to each new shock with disproportionate intensity, even when the actual economic indicators do not justify such a reaction.

This phenomenon, which researchers call the “double scar” effect, has become the defining condition under which European households are now processing the war in Iran and its knock-on effects on energy prices.