Thu, March 28, 2024

How Governments are Trying to Deal with the Second Wave

European stocks and economy, pandemic

The coronavirus pandemic and its impact on the economy is huge, and the pandemic continues to dominate the headlines. Importantly, the pandemic had a dramatic impact on Europe’s economy. Unfortunately, the coronavirus pandemic is far from being over. Moreover, a resurgence of cases once more underlines the severity of the problems.

Governments are working hard to contain an increase in infection cases. However, bars, restaurants, and other businesses as well have to deal with new restrictions. As a reminder, the first wave already caused significant damage to their businesses. Thus, it will be even harder to cope with the second wave.

People should take into account that, the economy of the 19 countries that use the euro suffered heavy losses. The economy fell by 11.8% in the April-June quarter from the previous three-month period. Importantly, around 1.5 million more people registered as unemployed during the pandemic.

Hopefully, governments spent hundreds of billions of euros to minimize the damage caused by the pandemic. Quick actions helped to keep another 45 million on payrolls and companies running. Interestingly, new restrictions are so far not as drastic as the near-total shutdown of public life imposed in the spring. Nevertheless, even less drastic measures have the potential to drive many companies out of business.

Notably, when it comes to restaurants, most of them suffered serious losses and the top priority is to avoid the worst-case scenario. For example, people who come in for a meal will have to leave earlier due to restrictions. As a result, fewer people will order extra beers or schnapps, which is where the restaurants make most of their profits.

Governments and risk factors

As stated above, governments are working round the clock to deal with the coronavirus pandemic. According to experts, the global economy’s course depends on the health crisis. It meant it is necessary to cope with pandemic as otherwise, it will be impossible to get the economy back on track.

Importantly, Europe had reduced the number of infections much faster than the U.S. managed to keep a lid on unemployment. However, as coronavirus cases continue to rise, economists are downgrading their forecasts.

Unfortunately, it won’t be easy to revive the airline industry. Interestingly, major airlines in Europe expect to operate at about 40% of normal levels this winter. Moreover, famous airlines such as Lufthansa, British Airways, and others are cutting tens of thousands of jobs, and even aid provided by the government proved insufficient to avoid this scenario. Despite all challenges, governments should work with companies to improve their financial performance.

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