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An employee vacuums the shop floor of a furniture store in London
AFP via Getty Images
The strength of the COVID-19 pandemic in Europe is about to bring to an end the swift recovery of the region’s economy during the summer months, as shown by a string of indicators published on Friday.
- Retail sales in the U.K. rose for the fifth consecutive month, in September, up 1.5% compared with August, on the back of strong demand for furniture and supermarket sales. This was higher than the most optimistic of analysts forecasts. British households spent 4.7% more last month than they did in September, 2019.
- Looking ahead, a string of surveys throughout Europe show businesses already registering a slowdown due to the restrictions ordered to counter the coronavirus spike. IHS Markit flash purchasing managers indexes for services fell in October in the U.K. and the eurozone, more than generally expected.
- Some major European companies, such as car makers Renault RNO, -0.48% and Daimler DAI, +1.03% and spirits group Pernod Ricard RI, +0.99%, published results in the last few days showing a strong resumption of sales in the quarter ended in September, but warned about the gloomy months ahead.
Read: Flash eurozone PMI slips to four-month low in October
The outlook: Europe’s economic rebound was stronger than expected, but then so was the severity of the second wave. The European Union and the U.K. now face long months waiting for elusive growth, while restrictions get increasingly stricter. And the U.K. leaving the union for good on Jan. 1 will worsen the slump.
The bad autumn virus surprise places governments in a bind. The big fiscal packages they had designed to counter the effects of the COVID-19 pandemic are unrolling, and some of them haven’t even begun to dole out the money — such as the €750 billion joint EU recovery fund, which will start spending in January. But the fiscal efforts from the spring are already insufficient, meaning that governments are called upon to do more, and even more, as the pandemic spreads.
Read: EU-U.K. trade talks were on the brink but here’s why the negotiators resumed discussions
