The terraces of bars and restaurants which are reopening in France; a Champions League final, Saturday May 29, in Porto, with 16,000 spectators present; Portugal, which authorizes the arrival of European tourists on simple presentation of a negative Covid-19 test… All over Europe, the start of normalization of daily life has begun. Mechanically, the economy is experiencing a sudden and strong rebound.
On Friday, the European Union (EU) Economic Sentiment Indicator, which is a monthly survey of consumers and businesses, jumped four points to 114.5 points, well above its average long term of 100 points. This is its highest level since the financial crisis of 2008, except for a few months in 2017.
All sectors show a similar improvement: industry, construction, services, commerce, consumers. The observation is valid in all countries. Italy saw the strongest progression (+ 11 points), followed by Poland and France (around + 5 points), while the Netherlands, Germany and Spain gained two to three points.
“An explosion in consumption is likely from June and for the summer, said in a note, Friday, Daniela Ordonez, economist at Oxford Economics. Household unemployment forecasts have also fallen sharply, showing that consumers believe the labor market recovery will be strong. “
Vaccination and opening of borders
According to the European Commission, growth is expected to reach 5.7% in France in 2021, 5.9% in Spain, 4.2% in Italy and 3.4% in Germany. For the euro zone as a whole, it should be 4.3%. Note that a more limited growth in gross domestic product (GDP) is not a sign of economic weakness, but indicates that the shock, in 2020, was less violent, requiring a smaller rebound.
The improvement in the economic situation is the direct consequence of the vaccination. After a chaotic start and two months behind the US and UK, EU countries have put in place relatively effective programs. As of May 30, 245 million Europeans had received at least one dose, or 46% of the adult population. And for now, despite repeated concerns, the vaccines appear to be effective against the new variants, including the one from India which is now widespread in the UK.
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