Data shows low-key European economic revival

Countries across Europe are making a gradual return to economic activity as novel coronavirus measures are relaxed, data has revealed, but a full-scale return to business still looks distant.

Italy and Spain, two of the worst-affected countries, and also Germany have been among the first countries to ease the rules and allow some commercial premises and workplaces to reopen, and France will begin the process early in May.

Although figures for economic consumption are not yet available, indicators such as travel data and energy consumption show that there are definite changes in behavior.

"There are some tentative signs of improvement in economic activity in the high-frequency data such as increased electricity consumption in Italy and Spain and slightly less depressed footfall in German cities over the past week," Jessica Hinds, Europe economist at Capital Economics, told the Financial Times, but she added that other indicators "have yet to show much, if any, progress".

Germany's office of statistics has recorded a slight increase in the number of journeys made on the country's highways by large trucks, an indication of renewed economic activity.

"Germany has now moved to be one of the least restrictive large economies in the eurozone," said Felix Huefner, European economist at UBS. "Every measure that helps the services sector get back to speed is important."

But the picture is far from being entirely clear. Amid fears that infection levels may rise again, Lothar Wieler, the head of Germany's disease control agency the Robert Koch Institute, urged that caution must still be exercised.

"Let us continue to stay at home as much as possible, keep observing the restrictions and keep a distance of 1.5 meters from one another," he said.

Italy's Prime Minister Giuseppe Conte was even more blunt in his advice. "If you love Italy, keep your distance," he said. "If we do not respect the precautions the curve will go up, the deaths will increase, and we will have irreversible damage to our economy."

Question marks remain over Europe's longer-term economic recovery, and what the new normal will look like after the pandemic is over.

At the start of April, numerous major economic surveys across Europe reported record levels of contraction, with figures far in excess of those seen during the crash of 2008.

Olivier Vigna, an economist at HSBC, said that "a key question is whether consumers will feel confident to spend once lockdown measures are relaxed," with Bert Colijn from bank ING telling the Financial Times "there is no sudden return to pre-COVID-19 daily life".

Even in the best-case scenario of there being no second spike in infections, it seems the process of getting back toward normality will be prolonged and economically painful.

"It looks likely the process (of lifting restrictions) will take months, which means that economic activity will likely remain below its pre-coronavirus levels during the rest of the year," said Angel Talavera from Oxford Economics.