21 December 2020 16:32
Martin Arnold in Frankfurt European consumer confidence rebounded to its highest level for nine months, buoyed by the promise of vaccines, before the latest lockdowns and travel restrictions took hold. The European Commission's consumer confidence indicator rose more this month than most economists had expected to minus 13.9 this month, 3.7 points from the November. Economists however expect the latest coronavirus-induced rules will drag sentiment down again. Te flash indicator was based on a survey done between December 1 and 20, which means many responses were submitted before EU governments imposed "hard lockdowns" and stopped travel from the UK in response to a surge and mutation in the virus. "A sustained pick-up in confidence is probably still several months away," said Melanie Debono, Europe economist at Capital Economics.
"We don't expect restrictions to be lifted until the second quarter, when enough of the population has been vaccinated." Thousands of truck drivers are stuck on each side of the English Channel following a 48-hour closure of one of the world's biggest trade routes by France and some of its EU partners in response to the rapid spread of a more infectious strain of Covid-19 in the UK. The EU held a meeting of its crisis response committee on Monday to discuss the new variant, which has prompted countries in the EU and beyond to ban travel from the UK. The hard lockdowns, including closures of schools and non-essential shops, imposed by many EU countries in the past 10 days were already expected to drag the region into a double-dip recession this winter. Economists said on Monday that the latest travel restrictions and trade disruption seen since the weekend were likely to make the economic contraction deeper and longer lasting. "The nature of the containment measures suggests another short sharp shock, with the restrictions relatively limited in duration," said Ken Wattret, chief European economist at IHS Markit. "But given that we are a long way from the worst of the winter, the likelihood of the restrictions lasting for longer must be relatively high." Mr Wattret has forecast a 2.5 per cent quarterly decline in the eurozone economy in the final three months of this year. He had expected the economy to rebound in the first quarter of next year, but he said "recent developments and unfortunately, the prospect of more of the same to follow, is clearly increasing the chances of back to back contractions".