Rising Infection Rates Slow Recovery in Consumer Spending in Europe
COVID-19 continues to hold European consumers firmly in its grip, according to GfK. In the six months since the outbreak of the pandemic, we’ve witnessed the sharp drop in the propensity to buy from April of this year and a following recovery.
September saw a rather restrained and mixed picture. While Italy and Spain experienced moderate growth in willingness to buy compared with the previous month, France and the UK remained stable, albeit at a low level. Germany, on the other hand, has had to accept losses, but spending is still at an extremely high level.
"With the end of the lockdown and the easing of the containment measures, the mood in Europe had recovered by early summer. However, with the renewed rise in the number of infections, this recovery process has come to a halt," explains Rolf Bürkl, GfK consumer expert. "The spread or containment of infection in the coming autumn and winter months will determine whether the European economy can resume its recovery course.”
German consumers propensity to buy recovered significantly following the sharp slump in April of this year but has not yet reached pre-crisis levels. The indicator stood at 38.4 points in September, five points less than in August. Compared with the previous year, the decline is currently just under 17 points. Germany is and remains the clear leader among the Big 5 EU countries under review.
In contrast to the picture in Germany, the willingness of Italian consumers to spend improved in September. The indicator gained almost five points and now stands at 3.1. Compared to the same period last year, the indicator is only slightly down, by three points. Due to the pandemic in April it was not possible to survey consumer sentiment in Italy in April, so the severity of the slump cannot be tracked completely. However, it is undisputed that the indicator recovered in the summer and almost reached pre-crisis levels again.
French consumers' willingness to buy experienced a remarkable recovery in early summer following the coronavirus shock in April. The indicator is currently stagnating. It gained only a meager 1.2 points in September, thus closing at 13.2 points. In comparison to the corresponding value of the previous year, the indicator is down by 20 points.
The willingness to buy in Spain increased by a good six points in September compared with the previous month, climbing to -24.8 points. Compared to the corresponding period of the previous year, there is a 17-point gap. Even before the Corona crisis, Spain had the lowest propensity to buy among the Big 5 EU. As a result of the financial and economic crisis, the country was struggling with very high unemployment.
Consumers in the UK currently show the weakest willingness to buy among the Big 5 EU countries. After a slight increase of 1.5 points in September, the indicator currently stands at -36.3 points. In a year-on-year comparison, the UK is also the worst performer with a minus of 36 points. The UK has also been severely affected by the pandemic. Containment measures, such as a strict exit restriction, were implemented, which severely impacted economic life.