The European Commission has revealed confidence levels in its single-currency bloc have plummeted as the global pandemic continues to spread like wildfire across the Continent. Brussels flash consumer confidence indicator fell a record five points to minus 11.6, its lowest since eurocrats were forced to deal with the economic ruins in 2014 left by the banking crisis. A wider measure of EU consumer confidence shows a drop of 4.5 points, back to its long-term average of minus 10.4.
Consumers fear swathes of firms will go out business and mass redundancies after the EU’s largest economies have entered lockdown to curb the spread of coronavirus.
The deadly disease has killed more than 16,500 people globally, with over half of the fatalities in Europe.
Melanie Debono, Europe economist at Capital Economics, has warned her forecasts show Eurozone unemployment could rock from 7.4 percent in January to nine percent by July.
“Households are sure to become more pessimistic in the coming months,” she said.
“Employment growth was already slowing before the crisis erupted and although governments are taking measures to keep people on the payroll, this will only limit, rather than prevent, the increase in unemployment.”
With many non-essential businesses forced to close, experts fear unemployment will once again rise after a steady decline since its peak at more than 19.3 million people during the 2013 debt crisis.
Most shockingly, German banks have experienced an unprecedented level of cash withdrawal from their ATMs as consumers prepare for an imminent financial crash.
The raft of measures implemented by Angela Merkel to halt the spread of coronavirus, could bring a hit of between 7.2 and 20.6 percent of GDP, according to a new study.
The influential Ifo think tank calculated the figures based on a partial shutdown ranging from one to three months.
Ifo president Clemens Fuest: “The costs are likely to exceed anything Germany has experienced in recent decades as a result of economic crises or natural disasters.
“The crisis will also cause massive upheaval on the job market. This could put the situation at the high point of the financial crisis into the shadows.”
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Berlin has since announced an emergency budget with huge spending plans to help limit the impact of coronavirus on the country’s economy.
The government could spend up to €750 billion, which is almost double the federal government’s previous 2020 budget, to prop up the country.
Finance minister Olaf Scholz said: “We don’t need to speculate; it’s clear there will be a negative economic impact. Anyone could say that just by looking at the empty high streets.”
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Economy minister Peter Altmaier added the expected downturn would “probably be at least as large as during the financial crisis”.
The uncertainty has prompted leading economists to clash their growth forecasts for this year.
Credit Suisse has predicted the Eurozone economy would shrink four percent this year, before not showing signs of growth in 2021.
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