Reuters is reporting on the Europe’s tourism industry and the ramifications that COVID-19 has for the eurozone nations dependent on tourism services’ income.
“Across the continent, from Portugal’s Algarve to the islands of Greece, beaches are deserted. There are no visitors at the Eiffel Tower or the Louvre, Edinburgh’s August festivals have been cancelled and the Netherlands’ flower fields are closed,” Returns writes.
Key notes
- The COVID-19 pandemic, which has killed nearly 180,000 people and infected more than 2.5 million globally, has thrown the travel and tourism industry into turmoil.
- International travel is expected to drop 39% this year, according to consultancy Tourism Economics – equivalent to 577 million fewer journeys.
- That is catastrophic for an industry that accounts for more than 10% of global gross domestic product (GDP) and employs some 320 million people.
- The European Union’s Internal Market Commissioner, Thierry Breton, wants a “Marshall Plan” using funds from Europe’s vast economic stimulus packages to haul hotels, restaurants, tour operators, travel agencies and cruise companies back from collapse.
- The British government is advising against all but essential travel anywhere, and Britons are cancelling summer holidays.
- A survey of 1,300 users from Germany by booking portal HolidayCheck showed that 40 percent are sticking to travel plans for this year and 30 percent want to spend their next holiday in Germany. Most just want clarity on cancellation terms.
Implications for deteriorating services
Travel and tourism sector has had a positive impact on the European economy over the recovery years since the GFC, it was directly contributing an estimated 782 billion euros to GDP in 2018, about 9.7% of Gross Domestic Product – (data according to the World Travel and Tourism Council (WTTC)).
The services sector had been the backbone to the European economy suffering in a manufacturing slowdown pertaining to the trade wars and Brexit. COVID-19 is driving the European Central Bank to the limits and forcing it to take drastic measures at the extreme of what it is prepared to do to help rescue the sinking economy.
The ECB has subsequently gone as far as to ease collateral rules and accepting sub-investment grade debt in its financing operations. However, this is no easy task as there is no agreement as to how the fund will be financed and the split between Northern and Southern countries on debt mutualisation is unresolved. “That makes a concrete macroeconomic recovery stimulus unlikely this week and it could be Q4 or next year before funds are mobilised,” analysts at ANZ bank explained.
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