COVID and the European economy

02 Jun 2021

In order to ensure great money management, deVere Vault identifies current affairs as a critical point of discussion. Clients should be aware of what’s happening and get the insight that will affect you – news that you won’t hear on everyday news. Europe’s economy underwent its most significant setback since the Great Depression during the coronavirus pandemic. With vaccinations being rolled at a quick rate, the EU and European governments are hopeful for a speedy recovery – and a better summer than the previous one. In order to see how Europe performed throughout the pandemic, studies looked into Europe’s four largest markets—Germany, France, Spain, and Italy. 

The bad news is that 2020 was a tough year for the economy but the good news is that we saw a quick bounce back in consumer spending. During the first lockdown in April 2020, the four listed countries saw a decline in spending of between 50% and 60%. The aftermath conveyed hope: Germany saw a recovery of +42%, France +60%, Spain +50% and Italy’s recovery was of +40%. Reports showed how Germany’s consumer spending was just 15% short of its pre-pandemic levels. Moreover, France’s consumer spending was higher than the rest throughout both lockdowns. 

Now that the vaccinations have started being rolled out, the EU economy is set to bounce back more quickly than expected the European Commission noted. The Guardian reported the commission’s forecasts: the EU’s GDP will grow by 4.2% in 2021 and by 4.4% in 2022. They were initially predicted to grow by 3.7% and 3.9% respectively. “The faster pace of vaccinations in recent months should allow restrictions to be eased further in the second half of the year, and in fact this is already happening, and thereby allow the economy to bounce back,” Paolo Gentiloni, the EU’s economics commissioner and former prime minister of Italy said. 

Positive news doesn’t stop there, studies have highlighted that the four markets saw a sharp increase in consumer savings in 2020. Germany and Spain are in the lead, saving 42% more at the end of 2020 compared to January 2020 and 38% more than in the year before respectively. In addition, the coronavirus pandemic brought with it new trends; authorities repeatedly recommended cashless transactions, and card payments are still on the rise, with no plan to decline.