The COVID-19 pandemic brought the world to its knees in a remarkably short amount of time. Fortunately, with more people getting vaccinated, the effects of the pandemic are slowly but surely receding into the past as nations in Europe move forward.
The damage that the pandemic inflicted on European economies was catastrophic. Here’s what you need to know about how COVID-19 affected consumers’ savings throughout Europe.
The pandemic has made a massive impact on consumer behavior. The magnitude of the effect is difficult to overstate. Millions of people were affected by losing a job, being laid off, or suffering some other financial malady.
Not only did the pandemic deliver a brutal blow to the finances of millions of Europeans living from Lithuania to Scandinavia, but it also took a toll on them mentally and emotionally. The utter uncertainty of it all made the situation even less palatable.
People who had been working at the same place for years on end were suddenly uprooted from their familiar circumstances and urged to work remotely or otherwise not work at all.
European consumers have responded to this by becoming rapidly and rather astonishingly thrifty.
Overall, the effect of this has left European consumers battered and much more cautious than in previous years. For example, consumers living in Lithuania have become much more careful about what they spend their money on.
Consumers in Lithuania have become more averse to borrowing money since the pandemic began. Although policies unrelated to COVID-19 had already set this behavior in motion, the pandemic certainly served to discourage Lithuanians from borrowing money.
Lithuanians have been holding on to more money and putting it into savings accounts while spending less. The fact that Lithuanian consumers are saving more and spending less may have a temporary effect on the economy.
By saving more money and keeping it in the bank or at home rather than spending it as it comes in, the Lithuanian economy may see some slower growth rates. This trend has affected other European economies as well.
As Europeans have become decidedly thriftier of late, this sudden zeal for thrift has resulted in disappointing sales figures for businesses across the Continent. To sum it up, savings have gone up while consumer confidence has gone down.
COVID-19 tested international economies more than almost any other event in recent history. It tested our institutions, our resolve, and even the very fabric of our idea of commerce as we know it.
People are experiencing conditions that they would never have expected. Europeans and people around the world were not prepared for these conditions. No one would have expected the economies of the world to come to a grinding halt and set the best-laid plans aflame.
The primary reason why so many Europeans are concentrating on saving money instead of spending it is that they don’t know how long these conditions will last. Even as the world has started to move on and slowly emerge from the chaos, they have witnessed since the pandemic began. In this light, it makes sense to want to hold on to what you’ve got when you don’t know what to expect tomorrow.
Although Europeans are choosing to save more money rather than spend it on novelties and commodities, the demand for lending services could very well pick up shortly.
An uptick in borrowing could be on the horizon because the money that Europeans have saved will only go so far. While the Europeans that chose to focus on saving money will face upcoming bills and financial challenges somewhat less painful than others, many of them will hit a wall.
When they hit that wall, they will need to borrow money. Millions of Europeans are at risk of facing a major financial setback. Although their savings are keeping certain financial dangers at bay right now, a simple medical emergency or vehicle problem could be all that it takes to evaporate what savings they have managed to acquire.
Every nation in the world responded somewhat differently to COVID-19. Some countries issued a stronger, sterner, more disciplinarian response that came with a suite of restrictions. Others chose to take a more relaxed approach to the matter in hopes of reinforcing their economies.
Here’s a brief overview of how European nations like Norway, Sweden, and Lithuania chose to respond to COVID-19. The way they responded to the pandemic influenced the behavior of the consumers that live there.
Lithuania’s response to COVID-19 had an enormous impact on how consumers manage their money. A large influx of migrants heavily influenced Lithuania’s COVID-19 strategy.
The nation closed bars, restaurants, pharmacies, educational institutions, and closed its borders.
Sweden had what was arguably one of the laxest responses to COVID-19 out of the nations mentioned above. Some hailed this relaxed response as a beacon of liberty and a noble effort to save the economy, while others viewed it as morally irresponsible.
Indeed, while there was a significant loss of life attributed to the less restrictive policies Sweden enacted, the economy didn’t fall as far down the rabbit hole as many others across the Continent.
At one point, Sweden’s carefree approach to COVID-19 restrictions put its economy ahead of most of the other economies in Europe.
Norway has been even less strict than Sweden in terms of lockdowns and restrictions. This approach has done much to help support the economy and keep the fires of commerce burning. At the same time, other nations saw their economies plunge into a dark abyss after enforcing multiple lockdowns and extensive restrictions.
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