What's going on?

A survey of European businesses in June (which was conducted prior to the Brexit vote) was released on Tuesday. It indicated that the economy has only been growing at a lukewarm pace, and that means it doesn�t have much cushion to weather the likely future economic headwinds created by the Brexit vote.

What does this mean?

According to the survey provider, the results suggest that the eurozone economy grew at about half the rate in the second quarter compared to the first quarter. A separate report showed that European retail sales (e.g. stuff you would buy in a store) rose 0.4% in May versus April � which was slightly less than economists had expected. These reports are consistent with �OK� economic growth � but they aren�t particularly encouraging. And that�s, of course, not factoring in the likely negative impact of Britain�s vote to leave the European Union (which will show up in future reports).

Why should I care?

For stocks: If the European economy weakens, stocks of companies with a European focus will likely suffer most. Companies that sell things that people in Europe like to have but don�t necessarily need (e.g. airlines or restaurants) are very much tied to the European economy. Most banks are also quite dependent on the economy, partly, because they have lent money to many companies whose profits (and therefore ability to repay the loans) are tied to the overall economy. Mining companies, for example, are more tied to the global economy than to Europe�s economy specifically.

The bigger picture: Europe and the UK are, collectively, a big economy. In fact, it�s the world�s largest economic bloc – for example, it�s a huge customer of Chinese exporters and a big user of US technology platforms like Google and Facebook. So, it�s important for global investors to pay attention to how these economies weather the post-Brexit storm because Europe�s performance matters for non-European companies as well.