Hermès Birkin bag. Getty Images.
Many European consumers are unlikely to return to pre-crisis spending levels, even after lockdowns have been phased out, according to the European Commission.
In a special review of its monthly consumer survey, the European Union’s executive arm said that excess savings accumulated during lockdowns appear to be concentrated in high-income people who are relatively unlikely to consume. Poorer households, meanwhile, have made very little money and are unlikely to spend on major purchases.
How soon will consumers give away their pandemic savings is key to the pace of the global economic recovery. It is even more important for Europe, where the recovery is lagging behind other advanced economies after a faltering start to the vaccination program.
All in all, the analysis of the results of the consumer surveys of income and age groups does not indicate significant additional impetus from future consumer spending, the committee said in the report.
Be it lockdowns or concerns about job stability, surplus savings in the euro area have skyrocketed over the past year, with Barclays Plc putting the figure at € 600 billion ($ 723 billion).
But the steady decline in consumers’ ratings of their finances over the past 12 months could mean that “even if virus control measures are lifted, many consumers will not be able to return to pre-crisis consumption levels” , the committee’s report said. .
The findings “point to a growing wealth inequality and a widening generational gap,” the report said.
By Carolynn Look