As the pandemic subsides and lockdowns spread, Europeans are making more and more savings and becoming increasingly pessimistic about the future. With one exception: Sweden.
Coronavirus has forced millions of people to turn to states for support, widened the gap between rich and poor, and exposed the weaknesses of countries that cannot easily switch to teleworking.
According to statistics analyzed by Reuters, European households are not optimistic about the future, especially in countries hit hard by the pandemic, such as Spain and Italy. Only Sweden has escaped this wave of pessimism.
Swedes are more optimistic today than they were before the pandemic, as they see their economic outlook improving, while in the rest of the European Union that outlook has fallen by at least a fifth.
“Sweden stands out,” said Gene Ambrosio, an economist at Finland’s central bank who discovered the difference in his research.
Across Europe, “dead” trade zones are a common phenomenon. However, Swedes continue to eat out, shop and do not wear masks. The country’s leading epidemiologist, Anders Tegnel, a pioneer of this policy, is very popular because he kept gyms and sauna areas open.
In addition, offices in Sweden were never closed, in stark contrast to what happened in other European countries. Ireland, for example, suffered the longest lockdown, closing all but one absolutely necessary workplace for 163 days from the start of the pandemic until mid-January, according to the Oxford Coronavirus Government Response Tracker.
According to the survey, the fact that their country remained open helped the Swedes maintain their optimism. Ambrosio also believes that the Swedish exemption may be due to their confidence in the government and the liberal response to the pandemic. Not the fact that there was no lockdown in the country, helped the economy, which has much better performance, compared to most European countries.
Although government policy has been criticized within the country, there have been no significant changes. The death toll from coronavirus in Sweden, although several times higher than in neighboring Norway, is lower than in many European countries that have imposed lockdowns. However, the number of cases in Sweden recently is worse than in Ireland.
Ireland has taken tough measures since the beginning of the pandemic. Shortly before Christmas, the government eased restrictions by opening pubs and allowing family gatherings. The dramatic increase in deaths a few weeks later was seen by the country’s politicians as proof that lockdowns are the only way to curb the spread of the virus.
The number of cases in Sweden has recently surpassed that in Ireland, but the increase is not as dramatic as expected. Coronavirus deaths in Sweden have exceeded 12,000, while in Ireland, with half the population, they have not exceeded 4,000.
Pessimistic Europeans stock up on cash
Over the past year, an important indicator of confidence has been the savings rate, which also reflects restrictions on shopping and travel. The greater the uncertainty about the future, the higher the rate of savings /
At the height of last year ‘s lockdowns, total savings in the European Union reached record highs. When circumstances began to ease and optimism returned in the third quarter of the year, savings fell, but remained higher than in the same period of 2019.
And in this matter, the Swedes reacted differently. In countries such as Ireland, Belgium and Germany, people began to save cash, while Swedish economies remained as they were.
Irish households had € 125 billion in bank accounts at the end of last year – an increase of more than € 14 billion compared to 2019. The Irish and Germans put aside about 30% of their extra income towards the end 2020, while the Swedes have not changed their habit of saving about one-fifth.
These figures underscore the importance of trust in the midst of an economic crisis, which can become even worse when government assistance is cut off.
Germany was the most generous. It supported six million workers, paying more than 4,600 euros a month – in April and about two million were still supported at the end of last year. This unprecedented government assistance protected the Germans from the worst effects of the pandemic.
Sweden, one of the richest countries in Europe, has launched large-scale government support programs to help people cope with the economic consequences of the pandemic.
Deep wounds remain
However, these support measures did not prevent the widening of the gap between rich and poor due to a pandemic. And this is a phenomenon much more visible in Ireland and Germany than in Sweden.
According to the analysis of recent statistics, the pandemic will lead to a dramatic increase in worker poverty, after months of lockdown. Especially the low wages of the tourism sector are in a dire situation.
“The effects of the pandemic are more pronounced in low-educated workers,” said Juan Palomino, of Oxford University. “Countries that rely on tourism, such as those in the south of Europe, and not those that rely on the banking and consulting sector, such as the north, are much more likely to face increasing poverty.”
Researchers studied scenarios for different countries, with two months of lockdown and nine months of some padlocks in the market. In Ireland, the proportion of “poor” workers – those earning less than 60% of average income – will rise from 27% before the crisis to 36.5% under the current circumstances.
The structure of the economy – how many work in jobs that can be done from home without reducing their income – is a decisive factor in whether it will survive the crisis.
Lockdowns are particularly difficult for tourism-based countries such as Ireland – and Greece. And this is a key factor in the prevailing pessimism.
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