The current macroeconomic situation is strongly influenced by the consequences of the war in Ukraine and extreme increases in energy prices. In addition, there are material and supply bottlenecks, sharply rising consumer prices and a shortage of skilled workers.
Our EU Business Cycle Monitor tracks the economic development in the EU countries on the basis of selected indicators.
©Statistisches Bundesamt (Destatis)
Economy and prices
Economic performance
The outbreak of the COVID-19 pandemic in March 2020 led to a severe slump in the economic performance of the EU economies. Uncertainty about future economic developments, downsized production and transport capacities, and a synchronised economic recovery subsequently led to long-term material and supply bottlenecks, some of which could only be alleviated in the course of 2022. Since February 2022, the EU economy has been facing new challenges as a result of the war in Ukraine. For example, sharply increased energy and food prices are having a negative impact on demand.
Final consumption expenditure of private households
Household consumption expenditure declined with the onset of the pandemic. Closed shops, cancelled cultural events, travel restrictions and increased work in the home office contributed to consumers temporarily spending less money on leisure, gastronomy, travel and mobility. Since the beginning of 2022, comparatively high inflation has had a dampening effect on consumption.
Prices
The consumer price index harmonised within the EU (including the inflation rate) plays an important role in assessing the overall economic development. Above all, the high prices for natural gas and mineral oil products are currently having a considerable influence on inflation rates. In addition, there are significant price increases for energy products at upstream economic levels as well as supply chain problems.
Economic sentiment
In April 2020, the economic sentiment indicator, which shows the economic climate in the European Union, fell more sharply than at any time since the survey began in 1985. After a temporary brightening, the situation was assessed more pessimistically again in many countries as a result of the war in Ukraine.
Consumer confidence
Consumer confidence in the EU also fell in April 2020 to its lowest level since the financial and economic crisis in 2009. In the meantime, consumers have become somewhat more positive again, but in many places they assess the overall economic and their own financial situation in the coming 12 months since the start of the war in Ukraine even worse than at the beginning of the pandemic.
Industry and construction
Manufacturing industry
Due to the pandemic, industry, and in particular manufacturing industry, suffered its sharpest decline in the spring of 2020 since the beginning of the time series in 1992. In the meantime, manufacturing output has stagnated, while industrial sales in many countries have risen.
Industry
Construction industry
Labour market
Unemployment
The economic consequences of the COVID-19 pandemic posed enormous challenges to the labour market. Government measures, such as short-time allowances, contributed to a comparatively moderate increase in unemployment in many EU countries. Recently, the unemployment rate has been declining slightly across the EU. The increasing shortage of skilled workers may also play a role here.
Services
The COVID 19 crisis has affected service companies to varying degrees. For example, companies in the entertainment industry or the travel industry - from tour operators to airlines to accommodation providers - experienced turnover losses. In other sectors, however, sales increased. For example, demand in the "postal, courier and express services" sector increased in many countries. Since the beginning of the war in Ukraine, the sharp rise in the consumer price index (inflation) and the acute shortage of skilled workers, among other factors, have had an impact on turnover in the services sector.
Services
Retail trade
Due to the temporary closures of shops, the stationary retail trade suffered heavy losses in turnover in times of pandemic. The fact that the drop in retail sales was not even higher was due to increased sales in supermarkets, pharmacies, drugstores as well as growth in online trade. After retail sales initially recovered after the pandemic, the reluctance to buy has been greater again since the beginning of 2022.
Accommodation and food service
Empty restaurants and closed bars: the measures to protect against the spread of COVID severely affected the hospitality industry across the EU in 2020/2021. The travel restrictions led to a slump in overnight stays compared to the previous year. With the end of the pandemic-related restrictions, the hospitality industry recovered.
Export
The COVID 19 pandemic had a strong impact on the international movement of goods. The temporary border closures, logistics disruptions and disruptions in supply chains were reflected in export figures. Russia's attack on Ukraine and the associated consequences, such as the extensive sanctions, among others, also have an impact on export business.
Notes
Overview of the country codes used in graphics.
The Statistical Office of the EU, Eurostat, harmonizes national data to make them comparable at European level. The data published by Eurostat for Germany may differ from the data published by Destatis for Germany due to this harmonization.
Last update: 01 August 2024.