Many of us, if not all of us, have experienced nothing like it before. As COVID-19 has ripped through the world it has created devastating chaos on the economies of Europe and other contents. Below is a look at some of the effects it has had and how EU Member States have sprung into action these past few months.
Experts have predicted that, economically, we’re not all going to be quite in the same boat. Although forecasts suggest the eurozone will suffer a decline of more than 7.5% in its economic activity. Countries whose economies thrive on tourism, such as Greece, Spain and Italy, will feel the impact of the pandemic heavily. Experts have forecast their economies to shrink by somewhere between 9 and 10%.
According to the OECD, the UK will suffer the worst. They believe Britain will experience a decline of 11.5% in its GDP. Italy and France won’t be far behind, however, with 11.3 and 11.4% respectively.
Job losses and remote working
Clearly, the pandemic has produced a surge in unemployment in Europe as businesses shut down, some never to reopen, or start to lay off employees who have become surplus to requirements in the COVID-19 world. Government furlough schemes have helped to keep the figures to respectable limits. The figures could have been much higher.
Others have held onto their jobs during the crisis and worked over the internet, which is where the information superhighway has come into its own and limited the damage. The only issue with everyone relying so heavily on the Net is the stress it has placed on networks itself. Still, anyone who’s not happy with their internet connection should check out the broadband deals on Cable and consider switching providers. They might get a better service for less.
Interest rate cuts
One of the more welcome effects of the pandemic — or unwelcome, depending on how you look at it — is the fact that banks have cut interest rates dramatically. The European Central Bank has made it cheaper for the eurozone’s banks to borrow money and national banks have cut their interests, making it easier for consumers to take out loans with them. Unfortunately, people who like to stash money away in savings accounts will have seen the interest on their savings drop.
The Bank of England also announced a quantitative easing programme, which creates money that it will then lend to the Government in return for bonds. This can make push up the price of government bonds, due to demand, but the interest rates on them go down. Investors may lend money to businesses again, which supports the economy.
Boom in new sectors of the economy
Not only have some people kept their jobs, luckily, however, but in the UK there has also been an increase in demand in some (new) sectors, which has created new jobs. The manufacturers of PPE products have benefited from the pandemic, of course, but retailers who offer home delivery services have also been onto a winner. Some have expanded their delivery teams to cope with the demand which has created thousands of jobs. Some businesses have also started to hire people in tech roles.
Overall, the pandemic has been bad news for European economies, but there have been some small silver linings out there from the crisis. The year ahead looks bleak, but the main message seems to be that it could have been a whole lot worse, so let’s just give thanks for small mercies.