CEOs Say Economic Recovery Will Be Slow. Europe’s recovery from the economic shutdown will take at least a year and as many as three, according to a majority of the 56 CEOs and board chairs belonging to the European Round Table for Industry.
About 53 percent expect recovery to take one to two years and 39 percent said two to three, according to a survey released last week.
The round table includes such companies as BASF, BMW, Daimler, Heineken, Nestle, and Nokia.
The officials rated their confidence in the current economy at 34 out of a possible 100 points, the same rating as their U.S. counterparts. Their confidence for the next six months ranked 48 to 50 for their industries and for the European economy overall.
Ratings below 50 signify pessimism.
“Business leaders almost unanimously provided the most negative assessment possible on present business conditions,” said Bart van Ark, the Conference Board’s chief economist.
U.K. Housing Market Crashes, Revives. The U.K.’s April home sales fell by 53 percent from a year previous and 46 percent below March’s level, according to government figures.
The plunge followed a government order preventing shoppers and real estate agents from visiting properties for sale and buyers from moving into their new homes.
After the government lifted some restrictions on the real estate industry on 13 May, real estate agents reported a surge in interest, with some logging as much as 120 percent more traffic to their websites than in previous weeks.
The Knight Frank agency, however, with offices across Great Britain, is maintaining its earlier forecast of 526,000 fewer homes sold this year, with prices falling an average of 7 percent.
The agency expects perhaps half of those lost sales to return in 2021.
U.K. Sells Bond With Negative Yield. The U.K.’s government has made its first bond offering that carries a negative interest rate. The three-year bond’s rate is -0.003 percent.
The negative rate means the bonds’ buyers will pay the government to hold its debt.
The bond offering heightened speculation that the Bank of England will lower its official interest rate from the current 0.1 percent into negative numbers to stimulate the economy.
The bank’s chief economist, Andy Haldane, said in a 13 May interview that the bank was considering such a move.
The U.K.’s COVID pandemic was more severe than many other countries. The country is reopening more slowly, fanning expectations that the economic rebound will be slower than in other parts of Europe.
Speculation about a negative U.K. interest rate has weakened the pound, which has dropped 7 percent against the dollar so far this year.
Italy’s Pool of Poverty Engulfs Middle Class. About 12 million Italians, more than half of the country’s workforce, have applied for government assistance as a result of one of Europe’s most severe economic shutdowns.
Unable to make a living, shopkeepers, restaurateurs, travel agents, and other middle-class Italians now must depend on welfare checks to survive.
Italy’s national food bank has reported a 40-percent increase in requests.
The country is poorly equipped to manage the emergency.
Italy never fully recovered from the Great Recession, which was followed in 2012 by the Eurozone’s debt crisis. The country emerged from that time carrying much more debt that previously, which it still has not cleared.
In addition, analysts expect Italy’s economy to shrink by 9.5 percent this year, more than any other country’s except Greece, and per-capita income to fall by more than 10 percent.
TREND FORECAST: As we have noted, many of the nations that rely on tourism will not rebound under current air travel and other restrictions.
In the U.K., for example, anyone traveling into the nation (except those from the Republic of Ireland, the Channel Islands, or the Isle of Man) must provide an address where they will be quarantined for 14 days. Anyone not filling out a “contact locator” form will be fined £100, and if they fail to self-isolate can be fined up to £1,000.
Italy’s economy never had recovered from the Panic of ’08.
And after being subjected since 9 March to one of the most restricted lockdown orders in the world – and now, deeper in debt and deeper into recession, the nation, with some 12 percent of its GDP tourism based, will sink deep in recession.
Yesterday, the Mussolini 2.0 in control of the nation said they would not allow travel between regions if people keep socializing in the streets.
“It may be human and understandable to want to go out after two months, but we mustn’t forget that we’re still in the midst of Covid-19 and so people fueling nightlife are betraying the sacrifices made by millions of Italians,” said Regional Affairs minister Francesco Boccia.
Ignored in the coverage is that the average age of the COVID-19 related deaths is 80 years old, and despite the rigorous lockdown, Italy had one of the highest virus death rates. There is also concern many of those who died had preexisting chronic health issues and may not have died from the virus.
Again, these type of travel restrictions and new “Laws of COVID Obedience” will discourage tourism and drive already diving economies deeper into financial ruin.
They will also spur the drive for nationalistic, anti-establishment political movements.
