{"id":134235,"date":"2021-08-03T09:09:26","date_gmt":"2021-08-03T09:09:26","guid":{"rendered":"https:\/\/precoinnews.com\/?p=134235"},"modified":"2021-08-03T09:09:26","modified_gmt":"2021-08-03T09:09:26","slug":"economists-fear-europes-recovery-could-be-derailed-by-one-key-issue","status":"publish","type":"post","link":"https:\/\/precoinnews.com\/business\/economists-fear-europes-recovery-could-be-derailed-by-one-key-issue\/","title":{"rendered":"Economists fear Europe&#x27;s recovery could be derailed by one key issue"},"content":{"rendered":"<ul>\n<li>A survey published in July by Ipsos Moris showed that 40% of U.K. consumers were not yet comfortable taking vacations abroad.<\/li>\n<li>Over 40% of respondents also said they were not comfortable going to large public gatherings such as sports or music events.<\/li>\n<li>The consumer behavior is being influenced by both government legislation and the evolution of the pandemic.<\/li>\n<\/ul>\n<p>LONDON \u2014 European consumers are proving more reluctant to spend money this summer, and it could hurt the economic recovery following the shock from Covid-19, experts told CNBC.<\/p>\n<p>The behavior marks a sharp contrast to last year, when there was a feeling of seizing the moment after the first Covid lockdowns in the region were lifted. Now, consumers are afraid they will be living with Covid-19 for longer than they had expected and are adjusting their attitudes accordingly.<\/p>\n<p>&quot;Because [the pandemic] has been going on for 18 months or so, we have got used to working from home and [are] more cautious about spending,&quot; Marchel Alexandrovich, European economist at investment bank Jefferies, told CNBC on Monday.<\/p>\n<p>Consumers are particularly skeptical about attending crowded events, according to Paul O&#x27;Connor, head of the U.K.-based multi-asset team at Janus Henderson.<\/p>\n<p>Speaking to CNBC on Monday, O&#x27;Connor said there had been a &quot;steady improvement&quot; in some economic indicators, such as the number of people using public transport, going shopping and even attending the gym. &quot;But there are some areas where we see continued consumer caution,&quot; he added.<\/p>\n<p>A survey published in July by Ipsos Moris showed that 40% of U.K. consumers were not yet comfortable taking vacations abroad. Over 40% of respondents also said they were not comfortable going to large public gatherings such as sports or music events.<\/p>\n<p>In addition, &quot;the return to work has been very hesitant,&quot; O&#x27;Connor said, despite the relaxation of Covid restrictions in the U.K. and elsewhere in Europe. This is impacting &quot;the economy around the office,&quot; such as coffee shops, he added, as people opt for a hybrid working model, spending most of their time at home.<\/p>\n<h2>The root causes<\/h2>\n<p>This consumer behavior is being influenced by both government legislation and the evolution of the pandemic.<\/p>\n<p>Alexandrovich gave the example of some &quot;hesitant&quot; consumers who are not leaving their house before they go on holiday to avoid being in contact with someone who has the virus.<\/p>\n<p>In the U.K., for instance, if you are in contact with someone who tests positive for the coronavirus in the following days, you must self-isolate for 10 days \u2014 even if you&#x27;re fully vaccinated (at least for now).<\/p>\n<p>Meanwhile, the highly transmissible Delta Covid variant has led to a surge in infections in recent weeks.<\/p>\n<p>\u00a0&quot;The evidence from the U.K. suggests that the surge in cases is hampering economic activity as people refrain from taking full advantage of reopening,&quot; economists at Pantheon Macroeconomics said in a note in July.<\/p>\n<p>As a result, this economic consultancy slightly lowered its expectations for U.K. growth in the third quarter. &quot;We suspect forecasters will soon have to contemplate the same in Europe, especially those coming into the third quarter with a baseline that (euro zone) GDP will leap by 3%,&quot; they wrote.<\/p>\n<p>Data released Friday showed that the euro zone grew by 2% in the second quarter of this year, recovering after two consecutive quarters in negative territory.<\/p>\n<p>Though many economists are bullish on the euro zone economy in the coming quarters, they describe it as a &quot;cautious optimism&quot;.<\/p>\n<p>&quot;The surging &#x27;delta&#x27; variant of SARS-CoV-2 infections across Europe during June and July raised the risk that the ongoing lifting of restrictions could be delayed significantly, &quot; analysts at Berenberg said in a note last week, although they did note that the number of new infections seems to be cresting in the 19-member bloc.<\/p>\n<p>Bert Colijn, senior economist at ING, also said in a note last week that &quot;looking ahead at [the third quarter], we would note that the Delta variant is causing some delays in the easing of restrictions and that supply chain problems continue to weigh on manufacturing production.&quot; However, he is still expecting GDP to grow by 2% next quarter.<\/p>\n<p>Momentum could be hit by other factors too.<\/p>\n<p>&quot;Growth in most major economies is likely to slow over the coming quarters,&quot; Neil Shearing, group chief economist at Capital Economics, said in a note Monday.<\/p>\n<p>&quot;But the main reason is that most economies have already recouped much of their lost output,&quot; he added, arguing that this likely be seen in the U.K. and euro area later this year.<\/p>\n<p>Source: <a href=\"https:\/\/www.cnbc.com\/2021\/08\/03\/europes-economic-recovery-could-slow-down-amid-delta-variant.html\" target=\"_blank\" rel=\"noopener\">Read Full Article<\/a><\/p>\n","protected":false},"excerpt":{"rendered":"<p>A survey published in July by Ipsos<\/p>\n","protected":false},"author":3,"featured_media":134234,"comment_status":"closed","ping_status":"closed","sticky":false,"template":"","format":"standard","meta":{"footnotes":""},"categories":[23051],"tags":[],"yoast_head":"<!-- This site is optimized with the Yoast SEO plugin v21.7 - 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