Faced with a high degree of uncertainty, households and firms have delayed consumption and investment, exacerbating the downturn and slowing the recovery.2 The ECB’s Consumer Expectations Survey shows that households sharply increased their desired amount of precautionary savings following the pandemic outbreak, and have only somewhat moderated that desire since.
Total investment in the euro area fell by 21% in the first half of this year and the data suggests only a partial recovery thus far. Looking ahead, the evolution of the pandemic and its associated containment measures is an ongoing source of uncertainty, especially given the recent rise in cases in several European countries.