Europe is going through tough times. The EU economy is in danger because emergency programs are about to expire. Restaurant owners could meet with great difficulties.
Mr. Carvalho owns a restaurant in Braga next to the country's oldest cathedral. He said that income is less than a third of the level that existed before the coronavirus outbreak. Thereby the country's borders were closed for tourists, and local residents had to stay at home. Even now, when the restrictions are lifted, there are no customers in his restaurant.
At the end of the summer, the Portuguese government is going to move on to other measures that are designed to encourage companies to maintain jobs positions, but the consequences can be unpredictable. Other countries also understand the danger of the situation, but despite the budget deficit, they are trying to expand support.
Most likely, this would not be enough, because demand remains low and is unlikely to recover in the near future. The Statistical Office of France INSEE reports that the activity of the European economy is below normal by more than 10%.
Small firms are on the verge of collapse. The shutdown of businesses means the loss of jobs, and, consequently, an unemployment increase. This, in turn, does not bode well for an already weak economy. According to the report of the Allianz SE insurance company, due to the cancellation of the fiscal policy, about 9 million people would be unemployed in 2021.
Former chairman of the bank Mervyn King is confident that support programs should be in effect until the moment when GDP is close to the pre-crisis level.
European countries continue to allocate billions to economic recovery. Thus, Germany would provide another €130 billion ($147 billion) to stabilize the economy. The government promised to allocate as much as needed, because it was not for nothing that Germany had been saving a budget surplus for many years.
The European Union, in turn, plans to launch a fiscal package in the amount of €750 billion. This support would help countries go further and possibly overcome the crisis. Italy would provide financial incentives for another €10 billion and prolong vacation programs from 14 to 18 weeks, which would protect some employees until the end of the summer.
The virus pandemic has shown how fragile an economy is. Obviously, shutting down the production is always much easier than restoring the global economy.
