Money Buzz! Europa

Tag: coronavirus

  • More than 70,000 businesses have closed due to the pandemic in Italy

    More than 70,000 businesses have closed due to the pandemic in Italy

    Almost 73,000 businesses in Italy were closed due to coronavirus pandemic, revealed a study by National Statistics Agency, DPA reports.

    This figure represents about 7% of the total of 1 million businesses included in the study conducted in late October and early November.

    About 55,000 businesses would resume operations in the future, while 17,500, of which 5,000 in the restaurant business, were permanently shut down.

    Another 700,000 continued to operate normally and 244,000 partially.

    The Istat study also found that 85% of closed businesses were small businesses with less than nine employees, usually sports centers, small hotels, shops and bookmakers.

  • COVID-19 is changing consumer behavior worldwide

    COVID-19 is changing consumer behavior worldwide

    COVID-19 is having a lasting, worldwide impact on consumer needs, preferences and behaviors, according to a new report from KPMG International.

    The survey tracks consumer trends between May and September 2020 across five industry sectors: consumer & retail (grocery and non-grocery), banking, insurance, entertainment & leisure and travel & tourism.

    Overall, the survey finds that consumers tend to trust brands less than they did pre-COVID 19.

    Insurance was the only sector to see a consistent net gain in trust in the May to September period; while travel & tourism and entertainment & leisure suffered the greatest erosion of brand trust.

    All sectors generally saw a modest increase in brand trust in September, with the exception of banking, which held even.

    Retailers will need to better understand the needs of the customer groups — via segmentation driven by AI and psychometrics. Personalization not only of communications, but also of developed products, will be key to meeting the needs of the new consumer. Besides, consumers are gravitating toward brands that are empathetic and supportive of their values.

    Consumer Commerce is the future. Bricks and mortar will remain an important channel although we know channel agnostic and customer centric is key and the competition will be much broader than today’s retail.”

    Nearly half, 45 percent, of respondents do not feel a strong financial impact, which could mean opportunities for businesses that are able to meet the new consumer’s expectations.

    All consumers predict they will spend less in the next 6-12 months and all are prioritizing savings. Perhaps not surprisingly, ‘value for money’ is ranked as the key purchase driver.

    Key trends in consumer behavior

    • Two in five (43 percent) of consumers are worried about their financial security in 2021
    • More than one-third (36 percent), are prioritizing savings over spending
    • 37 percent are working from home more, and 60 percent plan to do so more in the future
    • One in five (20 percent) want to stay at home as much as possible
    • Confidence in public transportation has declined 37 percent compared to before COVID-19
    • Net spend is expected to be 21 percent less over the next 6-12 months, versus pre-COVID-19
    • Close to half (45 percent) predict digital channels will be their main connection to brands
    • “Value for money” is ranked by 63 percent as the top purchase criteria
  • Delivery and takeout orders increased by 14% since the COVID-19 outbreak

    Delivery and takeout orders increased by 14% since the COVID-19 outbreak

    Since the COVID-19 outbreak, delivery and takeout orders increased by 14% for consumers ordering once a month or more, driving restaurants to rethink their physical footprints, according to a Deloitte study conducted among restaurant customers and executives in the industry from the US.

    Almost two thirds (68%) of consumers say they order delivery and 52%, takeout, and nearly half (46%) of the survey respondents expect these habits to remain at current levels once the pandemic ends.

    Millennials (ages 23 to 39) are leading the way in placing delivery orders (65%), 13% more than in the pre-COVID period, while 77% of Gen X (ages 40 to 55) respondents prefer takeout orders, 20% more than in the pre-COVID period.

    The study underlines that convenience, which has always been a major consumers demand, continues to top their expectations, with 62% of respondents saying this is their main reason for patronizing a restaurant.

    In the current context, convenience also includes delivery costs and wait times, pickup locations and contact.

    In terms of delivery costs, respondents consider a $4 average delivery fee to be fair. When it comes to wait times, 75% of respondents consider 30 minutes or less to be reasonable and only 20% consider it realistic to wait up to 45 minutes for their meal.

    While the restaurant spending is down more than 20% compared to the previous year, the study highlights a new trend in consumption, namely the increase in the size of the average restaurant check, which indicates more customers are looking for family or multi-portion meals and represents useful information for restaurants in reshaping their offer.

    Tech-savvy consumers demand digital engagement from restaurants and want cutting-edge technology options that recognize them and know their preferences, according to the survey conclusions and they are willing to allocate additional financial resources and pay an average of 14% more for such services.

    Seven out of ten respondents prefer to order digitally for off-premise delivery, 57% have a third-party delivery app on their phones and 48% follow a social media account from a restaurant or food brand.

  • The implications of COVID-19 for the Romanian financial system

    The implications of COVID-19 for the Romanian financial system

    Leonardo Badea, Deputy Governor of the Romanian National Bank, talked with Money Buzz! Europa about the implications of COVID-19 for the Romanian financial system.

    Mr. Badea says: ”The pandemic has affected the whole world and has already produced important changes in the economy. Almost all the systems and mechanisms by which economic activities were carried out so far are subjected to an extremely harsh test. The year 2021 promises to be just as difficult, at least during the first half, and the financial system might show some effects of deterioration of the quality of the loan portfolio. For the economy, the negative pressure will last probably for at least another 1-2 quarters, until through the efforts of the medical world and of the health system it will be possible to implement on a sufficiently large scale the measures to reduce the risk of disease.

    Undoubtedly the positive developments during the last month regarding the proven efficacy in clinical trials of several vaccines give us hope to finally get out of this crisis, to a new normalcy. However, it will take time for the economy to find its new equilibrium from which to start a new growth cycle.

    The COVID-19 pandemic had a number of immediate effects on the Romanian financial sector that were and continue to be adequately managed:

    • Operationally, the closure activities and the limitation of traffic (people and goods) have significantly affected the financial sector, like in many sectors of the economy, but not with the high intensity felt by the hospitality industry or airlines, and the necessary solutions for continuity were found and implemented (with great efforts).
    • The rapid intervention of the authorities (government, central bank, etc.) led to the avoidance of the liquidity crisis that could have been generated by these blockages both in the economy and in the financial system.

    From the perspective of the measures implemented by the National Bank of Romania (NBR) in the context of the COVID-19 crisis, the first ones chronologically were focused on payment and settlement systems. Given the rapid spreading of the negative effects of the pandemic, the NBR reacted promptly to provide credit institutions with the liquidity needed to accommodate both standard operations and the demand of bank customers for cash withdrawals. NBR provided banks uninterrupted liquidity for all transactions, including cash for ATMs. In the same context, NBR and the European Central Bank (ECB) signed an agreement that enables NBR, if necessary, to provide liquidity in euro for the local banks, through a repo line with the ECB.

    These measures on settlement and payment systems have been accompanied in the monetary policy plan by actions aimed at strengthening liquidity in the banking system and ensuring the proper functioning of the money market.

    The liquidity shock generated by the start of the COVID-19 pandemic in March 2020 was well managed by the banking sector. After a strong reaction in March, when the credit institutions needed to withdrawal important amounts of cash from the NBR to meet demand by population and businesses, during the following period the sources of bank financing from the non-governmental sector have increased, which shows that the balance was quickly restored.

    From a financial point of view, the impact of the pandemic crisis on the financial system has so far not been as visible as it has been felt in the economy, although some signs have been seen in the second and third quarters. Government measures to protect debtors affected by the pandemic and the easing of micro- and macro-prudential regulations have delayed this impact. Given that the share of loans held by the borrowers who have resorted to rate deferral facilities (based on the legislative moratorium and / or private moratoriums adopted by credit institutions) is at a level that cannot be neglected, the effect on the banking sector might become more visible after the expiration of the effects of the moratorium if the financial position of these borrowers will not allow them to resume payment of instalments.

    It is difficult to imagine that in an economic crisis of such proportions and which generates long-term structural changes, the financial system will not share some of the losses. Therefore, it is likely that we will see this at some point over the next year. Hence, creditors should initiate in advance the process of assessing the ability of borrowers to repay their loans after the expiry of moratoriums in order to identify problems and think of constructive and equitable solutions.

    The COVID-19 pandemic began at a time when the Romanian banking sector had a good risk resilience arising from the important capital consolidation in recent years, improved asset quality and a more liquid balance sheet structure. The increase in own funds available for loss absorption, the settlement of a significant part of the balance of non-performing loans and the consistent presence in the balance sheet of highly liquid assets (mainly government securities and exposures to the central bank) are other elements that contributed to strengthening the position of credit institutions.

    As of September 2020, the main health indicators of the Romanian banking sector were generally at better values ​​than those recorded in EU Member States. A significant proportion of the profit recorded in 2019 was retained and contributed to the improvement of solvency. As of September 2020, six months after the shock induced by COVID-19, the financial strength indicators of the banking sector are adequate:

    • total degree of capitalization: 22.8 percent (June 2020) (+3.1 pp annually).        
    • coverage with liquidity of 283.7 percent (September 2020) (+59.7 pp annually).        

    The non-performing loans ratio (4.1 percent, September 2020) re-entered a downward trend and the provisioning rate for non-performing loans (63.4 percent, September 2020) continued to place the banking sector in a more favourable position compared to the European average. The future evolution of the non-performing loans rate will depend on the speed of recovery as well as on the timing and manner of withdrawal of government support schemes.

    Among the factors that could mitigate the adverse effects of the crisis on the banking sector in Romania is the fact that before the onset of the pandemic companies with bank loans (at aggregated level) were in better financial health than the average recorded for the whole non-financial corporations sector. Even the companies that resorted to the suspension of rates payment had previously (at the end of 2019), on average, financial health indicators that placed them outside the risk area. Moreover, the resilience of the population sector has improved considerably compared to the situation before the global financial crisis. During the 12 months period before the outbreak of the pandemic, its net worth increased (by 11%) on both important components: in terms of real estate assets and in holdings of financial assets, the latter giving a higher degree of liquidity available for unforeseen situations.

    The profitability of the banking sector for the first nine months remained below the level recorded in the similar period of the previous year, a decrease that can be considered normal given the circumstances and which does not cause problems on financial stability.

    During this period, the Romanian banking system faces a threefold challenge:

    (1)   To support the flow of credit under the new macroeconomic conditions characterized by vulnerabilities and uncertainties ;  

    (2)   To manage the growing financial risks and to maintain its robustness ;  

    (3)   To adapt its activity to the new constraints generated by the need of a secure environment for employees and customers, but also in the context of the desire to improve operational efficiency and increase the degree of digitization.

    From this perspective, the pandemic crisis is more than just a test of the robustness of the system, for which, as we have seen, banks are well prepared. It is also a challenge to fulfil as well as possible its vital role in the economy.

    The crisis we are going through has already shown, more than the previous crises, the need to improve the structure of the economy by increasing the activities to protect the environment, implement and support technological innovations (especially in the digital field), increase inclusion and reduce inequalities. I believe that none of these objectives can be optimally achieved without the involvement of banks in providing at least a substantial part of the necessary funding”.

  • Poland: New measures to support the economy amount to USD 10 billion

    Poland: New measures to support the economy amount to USD 10 billion

    Poland is set to start a program worth about 9-10 billion dollars, meant to help the economy cope with the effects of the second wave of the coronavirus pandemic (Covid-19), Reuters reports.

    The largest economy in CEE has weathered the first wave of the pandemic, but after a strong recovery in the summer it looks set to enter a recession in the fourth quarter, due to the effects of restrictions to stop the increase in confirmed cases of Covid-19.

    The new program will be worth 35-40 billion zlotys ($ 9.33-10.67 billion), of which three billion zlotys for micro-enterprises, five billion zlotys for small businesses and the remaining 24-27 billion zlotys for medium and large companies.

    During the first wave of the pandemic, the Warsaw government and the Central Bank of Poland adopted programs to support the economy, loan guarantees and liquidity measures worth more than 300 billion zlotys.

  • Austrian Airlines to start mandatory Covid-19 rapid antigen tests on two flights

    Austrian Airlines to start mandatory Covid-19 rapid antigen tests on two flights

    On November 12, 2020, Austrian Airlines is starting a further testing phase on flights OS171 (Vienna-Hamburg) and OS172 (Hamburg-Vienna) in order to integrate Covid-19 rapid antigen tests in the travel chain.

    At this step, tests will be mandatory for passengers and the crew on selected flights. This ensures that all persons on board have tested negative for Covid-19.

    The implementation of the free Covid-19 rapid antigen tests will take place in close cooperation with airports in Vienna and Hamburg.

    After taking the test, passengers will receive their results within 10-15 minutes, either via SMS or, upon request, also after consulting medically trained staff.

    The boarding card is only activated if the test result is negative, enabling the passenger to gain entry to the security area and the gate.

    If the test result is positive, the affected passenger will be taken care of by the airport medical service in order to fully clarify the individual’s medical condition. Further steps will be specified with the responsible health authorities.

    In this case, the passenger will be able to rebook or cancel his or her Austrian Airlines flight at no cost.

  • C&A fully compensates apparel suppliers for all pre-corona orders

    C&A fully compensates apparel suppliers for all pre-corona orders

    C&A has ensured 100% compensation for all orders previously put on hold and has been placing new orders despite the economic headwinds the fashion industry is facing across Europe.

    C&A guarantees payment of all pre-corona orders that were in shipment, already produced or in production, at the original price and according to agreed payment terms. 

    In addition, suppliers are compensated for all pre-corona orders for which production had not yet started, either financially or by placing new orders utilizing raw materials that had already been purchased.

    This way, C&A has ensured compensation of its suppliers for all orders that had been put on hold at the beginning of the crisis as a precautionary measure in the face of the complete shutdown of all of the company’s 1.400 stores across Europe.

    Furthermore, many suppliers are supported through C&A’s supplier finance system in cooperation with the company’s partner bank.

  • Europeans’ concerns regarding financial and employment problems diminished

    Europeans’ concerns regarding financial and employment problems diminished

    Europeans’ concerns regarding their financial and employment problems diminished in the first four months since the first COVID-19 restrictions imposed by the authorities have eased, according to Deloitte State of Consumer Tracker survey.

    Two-thirds of respondents are being more open to the idea of making large purchases and more relaxed about the stability of their job.

    Nevertheless, Europeans are still as concerned about their physical well-being as they were during the lockdown (47% at the end of August, compared to 48% in May). European trends are in line with the global ones.

    The tracker also shows that safety remains a concern for the European consumers, considering that almost half of them (45%) say they do not feel safe when shopping in stores.

    The Germans are the most concerned about this matter (55%), followed closely by the Polish (51%), while the Belgians are at the opposite side (40%).

    However, consumers maintain their preferences for making certain purchases offline, considering that almost three quarters of respondents intend to shop in-store for groceries (77%) and household goods (73%).

    The results also show that, within the time elapsed since the restrictions relaxation, the intent to purchase household goods has tempered – the share of respondents who want to spend more on such goods has decreased from 20% in May 2020, to 12% at the end of August.

    At the same time, while 24% of respondents said that they wanted to spend more on grocery goods in May, their share reached 16% in August.

    Based on the analysis of the spending behavior, the study shows that the profile of the socially conscious shopper, which intends to buy more from local brands even if the cost is a little higher, still dominates throughout Europe (43%).

    Four out of ten Europeans say they are bargain hunters, a profile characteristic to people who buy on the spot non-essential items if they find good deals, this profile being the most common among the Germans (47%) and British (48%).

    The following profiles in terms of share among Europeans are the convenience seekers (34%), which are consumers who spend more on convenience goods, and the stockpilers (32%), which plan to buy stocks of goods for more than immediate needs.

    Deloitte State of Consumer Tracker is conducted based on biweekly online surveys, applied in Australia, Belgium, Canada, Chile, China, France, Germany, India, Ireland, Italy, Japan, Mexico, the Netherlands, Poland, Spain, South Korea, the United Kingdom and the United States.

  • Half of Bucharest’s employees continue to work mainly from home

    Half of Bucharest’s employees continue to work mainly from home

    Half of the employees who normally work in office buildings continued to work mainly from home even after the state of emergency was lifted, a research study conducted by Cushman & Wakefield Echinox regarding the working methods of employees in Romania during the Covid-19 pandemic say.

    If during the state of emergency (March – May 2020) 83% of the employees worked from home, their number decreased to 50% during the state of alert (June – September 2020), while 22% of the employees completely resumed their work from the office, and 28% practiced a mix between work from home and work from the office.

    Most of the employees managed to adapt to the new working conditions, taking into account that working from home was a less widespread concept on the local market, and the return to the office was done under special conditions, in compliance with medical safety rules and social distancing norms.

    Thus, 83% of the employees declared having a good experience both in terms of work from home and work from the office after returning from the alert state, the others finding this period unsatisfactory or even demoralizing from a professional point of view.

    The time saved in traffic remains the main advantage of working from home, a benefit appreciated by 83% of the employees, while the additional freedom in managing working hours (56%) and cost savings (52%) represent the following favorable aspects.

    On the other hand, 76% of employees feel the lack of direct communication with colleagues, almost half (48%) have difficulties in separating the  personal and professional hours, and 39% do not have a suitable working space at home.

    Moreover, 32% of employees consider that the relationship with their colleagues has worsened during the work from home period, and 21% have difficulties in managing the relationship with customers, collaborators and partners.

    In this context, only 7% of the employees would like to work exclusively from home after the pandemic ends, the most desired schedule being a mix of 3 days work from the office and 2 days work from home, an option chosen by 26% of respondents.

  • CEE: Restaurants and entertainment spaces impacted by new restrictions

    CEE: Restaurants and entertainment spaces impacted by new restrictions

    New measures have been recently adopted by the governments of the Central and Eastern European countries to contain the spread of the new coronavirus.

    Wearing masks became mandatory in the crowded outdoor spaces in most countries, while gatherings allow a limited number of people, schools are functioning online only or in a hybrid model, and restaurants are allowed to trade at limited capacity.

    Czechia

    In Czech Republic, the Government ordered all non-essential shops to close and tightened other social distancing rules starting 22 October. In the past two weeks, the country registered the highest number of COVID-19 new infections since the beginning of the pandemic, and the highest in the CEE.

    In addition, restaurants in Czech malls operate only for take away orders and deliveries.

    The Government communicated its support for all affected retailers and provides a subsidy of 50% of the rent and related charges, with no subsidy requested from landlords.

    In addition, the government covers 100% of payroll costs for companies affected by the restrictions.

    Romania

    In Romania, restrictions relate to temporary closing entertainment spaces in the cities/regions where the number of infections has exceeded 3 cases/1.000 inhabitants, while indoor restaurants in such regions can only operate for take away orders and deliveries.

    This is the case in three of the Romanian biggest cities, capital Bucharest, Timisoara and Cluj-Napoca.

    Poland

    In Poland, temporary restrictions have been implemented for fitness clubs and swimming pools. In addition, from 24 October onwards, indoor restaurants will operate only for take away orders and deliveries.

    Slovakia

    In Slovakia, indoor restaurants only operate for take away orders and deliveries, while entertainment tenants temporarily suspended their activities.

    Bulgaria

    Bulgaria is introducing more restrictions as coronavirus infections remained high. In the capital Sofia, bars, clubs and discos will close for two weeks.

    The order for the temporary closure will become effective on October 25 and will be in place until November 8. 

  • BAUHAUS to give full-time employees a 350 euros net ”Covid 19 bonus”

    BAUHAUS to give full-time employees a 350 euros net ”Covid 19 bonus”

    For their ”extraordinary commitment” in the Corona crisis, BAUHAUS will give to employees a 350 euros net ”Covid 19 bonus”, Heute reports.

    ”Many employees at BAUHAUS have faced particular challenges since the covid-19 pandemic started, whether professionally or privately,” says a company statement. ”Stress resistance, empathy and flexibility were particularly required in order to be able to react to the changing restrictions on the one hand and to the changes in customer behaviour on the other.”

    In addition, there was a mandatory mask rule and many other measures to minimize the risk of contagion for customers and employees.

    Last but not least, many employees also faced unexpected challenges in their private life.

    Therefore, every full-time BAUHAUS employee will receive an extraordinary ”Covid 19 bonus” of 350 euros net.

  • Global consumer spending to plunge by 8.6% to $44.3trn in 2020

    Global consumer spending to plunge by 8.6% to $44.3trn in 2020

    According to data presented by StockApps, the coronavirus outbreak is expected to cut global consumer spending to $44.3trn in 2020, an 8.6% plunge year-over-year.

    Falling consumer spending has significant effects on overall Gross domestic product (GDP) growth, considering it accounts for almost 70% of GDP.

    Before the COVID-19 crisis, global consumer spending has witnessed steady growth for five years in a row, revealed Statista, IMF, United Nations, World Bank, and Eurostat data.

    In 2015, it amounted to over $41.5trn. Over the next twelve months, this figure rose to $42.5trn and continued growing. Statistics show that in 2019, consumers worldwide spent a total of $48.5trn, the highest amount in a decade.

    However, the coronavirus crisis triggered a sharp fall in 2020, with global consumer spending expected to plunge by $4.2trn year-over-year.

    Nevertheless, statistics show the following years are set to witness a recovery, with consumer spending growing by 20% to $53.5bn in 2022.

    Switzerland is the leading country globally in consumer spending per capita

    Statista data also revealed that Switzerland represents the leading country globally, with over $40,000 in consumer spending per capita in 2020.

    Luxembourg ranked second with around $5,000 less than that. Iceland, Denmark, and Norway follow, with $34,300, $25,800, and $25,600, respectively.

    60% of Consumers Changed their Shopping Behaviour

    The McKinsey&Company survey showed consumers became increasingly cautious with their spending in 2020. Even after countries lifted lockdowns, many consumers still see their incomes fall, forcing them to reduce budgets and change shopping habits.

    Statistics show that increased time spent indoors led to significant growth in consumer spending on groceries, household, and home entertainment. Brazil, South Africa, and India lead in this category, with up to 30% consumer spending growth.

    Major consumer markets like the United States, United Kingdom, Germany, and China witnessed around 15% grocery shopping growth in the first half of the year.

    2020 has witnessed a plunge in clothes and accessories, outside entertainment, services, travel, and transportation spending. Respondents in all countries said they cut down spending in these categories between 20% and 50%.

    60% of consumers globally have tried a different brand

    The McKinsey survey also revealed the COVID-19 outbreak triggered a significant change in the shopping mindset.

    More than 60% of consumers globally have tried a different brand or shopped at another retailer during the crisis, mostly for convenience, value, and quality.

    In China and the United States, over 75% of consumers reported trying a new shopping method, and 60% plan to stick with it post-crisis.

    The United Kingdom and Germany follow with 71% and 54% of consumers who practiced new shopping behavior. In Japan, where lockdowns weren’t imposed, only 33% of consumers changed their shopping mindset.