December 1, 2020

As Europe’s Economies Reopen, Consumers Go on a Spending Spree

PARIS — Clémentine Sebert buzzed through an Ikea furniture store during her lunch break, filling her cart with decorative cushions, a new nightstand, lamps and a small rug. After being cooped up for two months during France’s coronavirus quarantine, she was back to work at the firm where she is a legal counselor — and ready to spend.

“I’m not so worried about the future,” said Ms. Sebert, who returned to her office last month after France’s lockdown was lifted, and was settling into a new rental apartment.

Because of a government program to support businesses during the crisis, Ms. Sebert kept her job and most of her pay while on furlough — a big help in paying for the new purchases. “If I had been unemployed, I wouldn’t be spending as much,” she said.

Consumers in Europe are going on a shopping spree as their economies reopen, offering hope that a fragile recovery from a deep pandemic-induced recession may be taking hold.

Retail sales in the eurozone, which plunged to record lows while millions were confined, surged 17.8 percent in May compared with the month before, as people fanned out to buy furniture, electronics, clothing and computer equipment, Europe’s statistics agency reported this week. The biggest gains are in France and Germany, where spending has rebounded to near pre-confinement levels.

ImageCustomers outside a restaurant in Paris last month.
Credit…Thibault Camus/Associated Press

The current binge has doused some worries that Europeans might feel too shaken to spend again, as happened in China, where many chose to curtail expenditures after losing their jobs or having their pay slashed.

“Consumers are driving the rebound across much of Europe more than expected,” said Holger Schmieding, chief economist of Berenberg Bank. “There is a relief that lockdowns are over.”

But whether people will keep opening their wallets remains to be seen. Spending is still around 7 percent lower than where it was before the pandemic hit. Last week the European Commission warned that the economy would contract 8.7 percent in the eurozone this year, a significantly deeper recession than forecast just two months ago. The commission’s study assumed no second wave of coronavirus that shutters Europe’s economies — a possibility it described as a “major risk.”

For now, at least, patrons have not stopped flocking to socially distanced sidewalk tables at cafes and bistros in France. Dutch flower and plant suppliers are reporting record demand as shoppers crowd do-it-yourself stores around Europe to beautify their homes. In Germany, families are heading to malls to buy new appliances after the government lowered the value-added tax to stimulate sales.

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Consumer spending is crucial to Europe’s revival, accounting for more than half of its economic activity. During previous downturns, business investment and exports tended to be the main drivers of a rebound. But the closure of borders and vast parts of the economy in the coronavirus crisis has hit capital spending and weakened trade, making a business-driven recovery uncertain.

Credit…Dmitry Kostyukov for The New York Times

Governments are spending billions of euros to limit the damage, mainly by focusing on policies to limit mass unemployment. France, Germany, Denmark, Italy and most of Europe are now extending through the end of the year short-time work support schemes, like the one that helped Ms. Sebert continue to draw a paycheck.

Ms. Sebert was able to collect 80 percent of her salary while furloughed during confinement, as one of around 14 million workers in France who benefited from the state-backed program. While support in other countries was less generous, the programs have helped cushion income losses for an estimated 60 million people around Europe.

“This is a government-subsidized recovery in spending, but that is exactly the intention,” said Bert Colijn, senior eurozone economist at ING. “If this hadn’t happened, the counter effect would be disastrous. It’s a confirmation that the policy is working as intended.”

The spending wave is already helping to tilt some sectors toward recovery. At Adecco, one of Europe’s largest temporary recruiting agencies, demand for retail and restaurant workers — many of whom lost work during lockdowns — has rebounded sharply since the middle of May.

“Consumption is returning probably due to the fact that the government put a lot of money on the table,” said Christophe Catoir, Adecco’s president for France and northern Europe. As a result, he added, “hiring is coming back.”

Credit…Alessandro Grassani for The New York Times

Some of the splurge is no surprise: People couldn’t shop or dine out during confinements, and now they can.

Still, with government support programs in place, consumer spending could return by the end of this year to nearly what it was before the lockdowns, said Mr. Schmieding, who has now revised his outlook for the recession from disastrous to merely bad. “For the second quarter, we now pencil in a plunge of 13 percent instead of 15.1 percent for the eurozone,” he said.

Those are still grim figures, and economists don’t expect a return to normal levels until health risks abate, making a full economic recovery unlikely until a vaccine for the coronavirus is found.


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  • Frequently Asked Questions

    Updated July 7, 2020

    • What are the symptoms of coronavirus?

      Common symptoms include fever, a dry cough, fatigue and difficulty breathing or shortness of breath. Some of these symptoms overlap with those of the flu, making detection difficult, but runny noses and stuffy sinuses are less common. The C.D.C. has also added chills, muscle pain, sore throat, headache and a new loss of the sense of taste or smell as symptoms to look out for. Most people fall ill five to seven days after exposure, but symptoms may appear in as few as two days or as many as 14 days.

    • Is it harder to exercise while wearing a mask?

      A commentary published this month on the website of the British Journal of Sports Medicine points out that covering your face during exercise “comes with issues of potential breathing restriction and discomfort” and requires “balancing benefits versus possible adverse events.” Masks do alter exercise, says Cedric X. Bryant, the president and chief science officer of the American Council on Exercise, a nonprofit organization that funds exercise research and certifies fitness professionals. “In my personal experience,” he says, “heart rates are higher at the same relative intensity when you wear a mask.” Some people also could experience lightheadedness during familiar workouts while masked, says Len Kravitz, a professor of exercise science at the University of New Mexico.

    • I’ve heard about a treatment called dexamethasone. Does it work?

      The steroid, dexamethasone, is the first treatment shown to reduce mortality in severely ill patients, according to scientists in Britain. The drug appears to reduce inflammation caused by the immune system, protecting the tissues. In the study, dexamethasone reduced deaths of patients on ventilators by one-third, and deaths of patients on oxygen by one-fifth.

    • What is pandemic paid leave?

      The coronavirus emergency relief package gives many American workers paid leave if they need to take time off because of the virus. It gives qualified workers two weeks of paid sick leave if they are ill, quarantined or seeking diagnosis or preventive care for coronavirus, or if they are caring for sick family members. It gives 12 weeks of paid leave to people caring for children whose schools are closed or whose child care provider is unavailable because of the coronavirus. It is the first time the United States has had widespread federally mandated paid leave, and includes people who don’t typically get such benefits, like part-time and gig economy workers. But the measure excludes at least half of private-sector workers, including those at the country’s largest employers, and gives small employers significant leeway to deny leave.

    • Does asymptomatic transmission of Covid-19 happen?

      So far, the evidence seems to show it does. A widely cited paper published in April suggests that people are most infectious about two days before the onset of coronavirus symptoms and estimated that 44 percent of new infections were a result of transmission from people who were not yet showing symptoms. Recently, a top expert at the World Health Organization stated that transmission of the coronavirus by people who did not have symptoms was “very rare,” but she later walked back that statement.

    • What’s the risk of catching coronavirus from a surface?

      Touching contaminated objects and then infecting ourselves with the germs is not typically how the virus spreads. But it can happen. A number of studies of flu, rhinovirus, coronavirus and other microbes have shown that respiratory illnesses, including the new coronavirus, can spread by touching contaminated surfaces, particularly in places like day care centers, offices and hospitals. But a long chain of events has to happen for the disease to spread that way. The best way to protect yourself from coronavirus — whether it’s surface transmission or close human contact — is still social distancing, washing your hands, not touching your face and wearing masks.

    • How does blood type influence coronavirus?

      A study by European scientists is the first to document a strong statistical link between genetic variations and Covid-19, the illness caused by the coronavirus. Having Type A blood was linked to a 50 percent increase in the likelihood that a patient would need to get oxygen or to go on a ventilator, according to the new study.

    • How can I protect myself while flying?

      If air travel is unavoidable, there are some steps you can take to protect yourself. Most important: Wash your hands often, and stop touching your face. If possible, choose a window seat. A study from Emory University found that during flu season, the safest place to sit on a plane is by a window, as people sitting in window seats had less contact with potentially sick people. Disinfect hard surfaces. When you get to your seat and your hands are clean, use disinfecting wipes to clean the hard surfaces at your seat like the head and arm rest, the seatbelt buckle, the remote, screen, seat back pocket and the tray table. If the seat is hard and nonporous or leather or pleather, you can wipe that down, too. (Using wipes on upholstered seats could lead to a wet seat and spreading of germs rather than killing them.)

    • What should I do if I feel sick?

      If you’ve been exposed to the coronavirus or think you have, and have a fever or symptoms like a cough or difficulty breathing, call a doctor. They should give you advice on whether you should be tested, how to get tested, and how to seek medical treatment without potentially infecting or exposing others.


Mindful of the risks, consumers are remaining cautious. Despite their splurging since lockdowns have eased, consumers have also socked away savings at a record rate, causing bank deposits across the continent to jump, in case things take another turn for the worse. The European Commission expects this increase in savings, which could otherwise be stimulating a recovery, to keep rising.

And not everyone has been able to take advantage of income-supporting furlough programs. Lockdowns and business closures have hit the most vulnerable workers in Europe especially hard, according to a report this week the Organization for Economic Cooperation and Development.

Credit…Samuel Aranda for The New York Times

Hundreds of thousands of people, especially the self-employed and those on temporary or part-time contracts, have been exposed to steep income losses. They won’t be able to join the ranks of consumers who have the disposable income to support a recovery.

Many are in countries along Europe’s southern rim where the coronavirus hit hard — especially in Spain and Italy — leading to long quarantine periods that have proved a drag on prospects for economic recovery.

“We’re seeing that there’s an ugly divide opening between countries that had a harsher lockdown and the ones that didn’t,” said Mr. Colijn of ING. “It puts the southern periphery at risk of a prolonged slump compared to their northern neighbors.”

In the United States, consumer purchases jumped 17.7 percent in May after many stores and restaurants reopened, but in the last several weeks there has been a surge in virus cases, and some regions have resumed lockdowns. The new closures have renewed fears that the next lot of consumer spending data — the numbers for June will be announced Thursday — may show a stumble, threatening an economic comeback.

For many European consumers, the lack of major new coronavirus outbreaks has underpinned confidence.

Credit…Laetitia Vancon for The New York Times

On a recent weekday, Toni Kehler, an administrator at a Munich-based company, made a beeline to the Alexa Mall on Berlin’s Alexanderplatz to check out a new high-definition television that he and his family had been eyeing for a while.

With the German government leading the way in Europe in support programs for companies and workers, a big factor behind his purchase was a sense of security that he wouldn’t lose his job, Mr. Kehler said.

“We had planned on buying this for a while,” he said. “There is no reason not to do it now.”

Théophile Larcher contributed reporting from Paris, and Christopher F. Schuetze from Berlin.