Kovid-19 is three times the household savings, according to a recent report by the Bank of Italy. This trend is similar in many other countries; European citizens collected ants, fear of losing their jobs, general uncertainty, and loss of their purchasing power due to imprisonment. There are those who expect funding to come after the storm, prompting investment / spending, recovery and inflation. But will the newly discovered opportunity be enough to support the recovery? What will be the mental attitude of consumers after months of fear? Will the offer ever return to its pre-Pandemic style?
European background: In Spain and Ireland, household spending is declining and savings are declining; Sweden exemption
In the second quarter of 2020, the European Union recorded the highest increase in the year since the start of home care surveys. Eurostat: +10.8 percent points, the institute writes. The main reason? Household spending fell 17.3 percent year-on-year.
Compared to the second quarter of 2019, in the second quarter of 2020, Home care rates have risen in all but one member state where data is available. Sweden (-0.6%), Ireland (+ 22.0%) and Spain (+13, 7%) were the only member states to decline.
In parallel, Spain (-23.9%) and Ireland (-22.8%) recorded the largest decline in household spending. The Czech Republic (-4.4%) and Denmark recorded the lowest declines. (-7.7%).
51.6 billion net profit in Italy
In crisis-stricken Italy, Italian consumption fell by half in the first half of 2020 “Net profit to 51.6 billion; savings rate more than tripled by the end of 2019 (from 2.8 to 9.2%), Bank of Italy writes. Earnings worse than the crisis of 2007-2008” Families with the lowest levels in the last 20 years have returned to investing in BOTs.
In France, domestic consumption accounts for about 50% of GDP
The French economy will experience a slower recovery in 2021 (4.8% vs 7.4%). The pre-crisis level of GDP should not be restored by mid-2022. Well-being, the medicine for the Bank of France is undoubtedly home consumption. In fact, in the hexagon it represents more than 50 percent of French GDP, more than the general demand (23%) and business investment (14%). After the expected 8.2% contraction in 2020, according to Bank de France Consumption is expected to grow by 4.1 percent in 2021 and 8.1 percent in 2022. In short, as predicted, the French could not wait for Cicadas to return. (By the end of December, the savings surplus was estimated at 130 130 billion, with the average savings rate rising from 15% to 21%. Available within a year according to INSEE).
In Germany, imprisonment contributes to savings and income erosion inequality
In Germany, too, economic recovery is largely private consumption. “We hope to gradually ease container procedures in the spring of 2021, thanks to medical advances,” Bundesbank President Jens Weidmann said last December, thus capturing new “customer opportunities”. Berlin expects economic growth of 3% and 4.5% in 2021 and 2022, respectively.
Thus GDP will reach pre-crisis level from the beginning of 2022, but only if households pay the costs and lend. In the first half of 2020, consumer spending fell sharply on disposable income, while savings rates rose sharply. Reason? According to a Voting Of Bundesbank Conducted in May, about half of those who reduced consumption indicated that certain goods and services were unavailable due to restrictions. However, respondents expect each month of the coming year to see a drop in income ID of 64 64 per month (from May 2020 onwards) with big differences. 40% expect income to fall below 500 500 per month, while 54% expect an increase in income (Pensioners or employees). Classic precautionary measures such as the fear of losing one’s job played a secondary role in the attitude of saving.
Economist Paulo Guerrero: “There are two conditions for recovery ‘Question’ “
“When you can start spending again, everything depends on the use of the savings, and here they come up Two situations, The first is more optimistic and the second is more realistic. The first scene thinks of a V-shaped recovery: the sooner we are in crisis, the sooner we can get out of it – he explains Polo Guerrero – Because the moment people can spend it again they will quickly return to previous habits. The plan is to treat the economy like a spring of compression in a health emergency, and then you leave the spring and everything goes back to normal. “
Other thesis, the more pessimistic theory, argues that this will not happen due to a number of factors, including the duration of the desire to spend and the nature of the offer. “I take a darker view than other colleagues, and I’m more into this second thesis,” Guerrero said.
Reason? “Spending trends also affect psychiatric scientific attitudes, and an offer will change and change: some areas have sunk. How long will it take to recover?”
Question not offered? “Up to a certain point. Distribution has a life of its own, it can not only meet demand, it can also be a barrier: demand is colliding with changing supply. We consider the entire service sector with physical interference. It will be affected by the crisis among the people. Think about the aviation sector. , Digital and information technology are booming.
What happened in September proves both essays to be true: there was a return to consumption in September, but it did not last long, and it ended in November, when there was a break before the new prison. I’m more confident in a more pessimistic situation, but in the darker version, as an offer is already being reorganized, you see the digital leap, but it will take time to get back into motion. “
Even two or three years? “Possible. If it takes two or three years, it won’t be easy.”
Will it be like 2008? “Unlike in 2008, everyone knows today that we must continue to support the economy until it is on its own. Of course, we can not continue indefinitely, the deferred recovery will complicate everything.
Governments cut in 2008 … “This mistake is not being repeated today.”
How long will the ECB support debt? “He said it as long as he needed it. He made the mistake of cutting all aid in 2011, but as I said today, it’s different.”
There is another kind of crisis “The financial sector was in crisis in 2008, which led to results that we still have not overcome. This time, the banks have put up even better resistance; the inadequacy crisis associated with the closure of the system for health reasons is a completely different barrier. That is why all theories are particularly uncertain.”