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Rising Infection Rates in Europe Slow Recovery in Consumer Spending, GfK Says

10/15/2020 | 04:15am EST

By Maria Martinez

The coronavirus continues to hold European consumers firmly in its grip, according to a report on consumer climate in Europe's five largest countries by market-research group GfK.

September showed a rather restrained and mixed picture in propensity to buy, GfK said. While Italy and Spain experienced moderate growth in willingness to buy compared with the previous month, France and the U.K. remained stable, albeit at a low level. Germany, on the other hand, showed losses, but spending is still at an extremely high level.

"With the end of the lockdown and the easing of the containment measures, the mood in Europe had recovered by early summer. However, with the renewed rise in the number of infections, this recovery process has come to a halt" said Rolf Buerkl, consumer expert at GfK.

The spread or containment of infections in the coming autumn and winter months will determine whether the European economy can resume its recovery course, Mr. Buerkl said.

German consumers' propensity to buy recovered significantly following the sharp slump in April but it hasn't yet reached pre-crisis levels. Extensive fiscal stimulus packages and the intensive use of short-time work regulations prevented a slump in the labor market, stabilizing consumption, GfK said.

In contrast to the picture in Germany, the willingness of Italian consumers to spend improved in September. The current rise in infections in Italy is still quite moderate and GfK said this has contributed to the positive development.

French consumers' willingness to buy experienced a remarkable recovery in early summer but it has been plateauing since July, coinciding with a noticeable increase in unemployment.

"The fear of job loss is growing, as a result, the consumer mood is being dampened," GfK said.

The willingness to buy in Spain increased strongly in September compared with the previous month. Even before the coronavirus crisis, Spain had the lowest propensity to buy among the five largest European economies. Due to its already low level of consumer spending, the pandemic-generated slump in April was comparatively moderate.

"Unfortunately, this also applies to the subsequent recovery, which was weaker than in the other countries," the market-research group said.

Consumers in the U.K. currently show the weakest willingness to buy among the five economies analyzed. The U.K. has also been severely affected by the pandemic and uncertainty about Brexit has put additional strain on consumer sentiment, GfK said.

Recently, the number of infections in the U.K. has also risen again, which is likely to increase the fear of further containment measures among the population and to have a negative effect on consumer sentiment, the research group said.

Write to Maria Martinez at maria.martinez@wsj.com

(END) Dow Jones Newswires

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