The European Commission recently claimed that economic confidence in Europe was starting to recover in August. Yet, recent research forecasts suggests that the coronavirus crisis has placed up to 59 million jobs at risk across the continent. Redfield & Wilton Strategies found that, in Italy, France and Spain—three of the worst hit countries by the pandemic—a majority of respondents are pessimistic about the future of the economy.
In a recent interview with the Italian newspaper Corriere Della Sera, Deputy Finance Minister Antonio Misiani declared that the Government was expecting a single-digit percentage decline in GDP this year, confirming that the Italian economy was slowly recovering in the third quarter after a devastating second quarter induced by the coronavirus pandemic.
Misiani’s enthusiasm, however, does not appear to have translated into Italian public opinion. In fact, pessimism about the future of the economy has increased in both Italy (+4 points) and Spain (+7 points) when compared to a similar poll conducted in July. 53% of Italians are pessimistic about the future of their national economy compared to 49% in July, and 64% of Spaniards are pessimistic compared to 57% a month ago. By contrast, 55% of French respondents expressed their pessimism about the economy in August compared to 57% in July.
French respondents are, however, not more likely to be hopeful about the future state of their economy, with only 18% of the public answering that they were optimistic in both August and July. Overall, Spaniards and Italians were slightly less likely to express their optimism, with just 16% of the public answering so in both countries.
In this context, a greater proportion of Spaniards in August than in July say they are spending less money than they did prior to the pandemic, with 47% saying they are spending less compared to 41% in July. By contrast, however, relatively fewer French and Italian respondents have decreased their spending in August: 27% of French respondents say they are spending less than prior to the coronavirus crisis compared to 32% who said this in July. Meanwhile, 30% of Italian respondents claimed to spending less in August than prior to the pandemic, compared to 31% who responded this way in July.
Interestingly, we found that those between the ages of 18 and 24 in Italy (27%) and France (24%) were less likely to answer that their spending has decreased since before the coronavirus pandemic than their older counterparts: 35% of Italians and 31% of French between the ages of 55 to 64 answered that they are spending less than before the pandemic, even though they generally have more disposable income than younger respondents. To account for such a disparity, it may well be that younger respondents spend their income on essential expenses which they cannot reduce, whereas older respondents can decrease their spending on non-essential items.
Lastly, we found that a majority of Spaniards (62%) and Italians (50%) who indicated having reduced their spending habits in August (compared to before the pandemic) have done so primarily due to financial concerns. French respondents were more split in their answers with 46% of them answering that they have reduced their spending for other reasons, which may well be caused by a reduction in travelling during summer holidays or fears of going into closed public spaces. Indeed, our research found that a majority of Italians (56%), French (52%) and Spaniards (70%) do not currently feel safe eating at a restaurant or drinking at a bar inside.
Overall, mounting pessimism about the future of the economy in Europe is reflected in spending habits in August, with older generations seemingly more inclined to spend at least the same as before the pandemic than younger ones.
