With the spiraling cost of living and gloomy economic forecasts making most Europeans ever so frugal about their Christmas budgets, businesses throughout Europe are bracing for dwindling end-of-the-year revenues.
According to Eurostat, the statistical office of the European Union (EU), the eurozone annual inflation rate was 2.4 percent in November, down from 2.9 percent in October. However, the November inflation was higher in the case of food, alcohol and tobacco products, amounting to 6.9 percent.
Most Europeans have responded to higher prices by tightening their belts, according to Maltese economist David Zahra.
“There are so many more expenses that families have to deal with that they are being extra careful on how they spend the little they have left for Christmas,” he told Xinhua.
Maltese restaurant owner Jessica Cini concurred, lamenting about the fact that for the first time in five years, there was not one day when her restaurant was fully booked during the Christmas period.
Joseph Camilleri, a Maltese resident with two children, is also cutting back on Christmas-related shopping this year due to a sharp increase in the cost of living in the past months.
“I’m spending over 100 euros (110 U.S. dollars) more a week on food for my family. Having two children who are growing fast and eat a lot, my wife and I often joke that we’ll lose weight this Christmas because it’s going to be a diet Christmas,” he laughed.
Zagreb citizen Bozica Koscak is also planning a low-key Christmas with her husband and kids. “Rising living costs are putting a huge pressure on us,” she told Xinhua, adding that buying things at sales was one way to cope with rising inflation. “This situation is not normal,” she complained.
Vanja Milovic, who works in a government institute in Bosnia and Herzegovina (BiH), has complained to Xinhua about the need to economize heavily. “Food prices are very high … To spend less money, that’s only what I can do,” she said.
Sharing tips on how to save money in the Christmas season has gained popularity in the German media.
According to a recent survey published by the market research institute GfK, nearly three-quarters of German households with low net incomes intend to economize on Christmas groceries.
The higher inflation rate and uncertainty about the future are affecting household spending intentions, Horst Loechel, professor of economics at the Frankfurt School of Finance and Management, told Xinhua.
Over 50 percent of British families are also tightening their Christmas budgets due to the escalating cost of living, according to a YouGov survey conducted in early December.
Another survey done recently by the Office for National Statistics (ONS) among British adults came to the same conclusion, with 46 percent of the respondents planning to buy less Christmas food or presents.
“Retailers are banking on a last-minute shopping frenzy in December and will continue working hard to deliver an affordable Christmas for customers so everyone can enjoy some Christmas cheer,” said Helen Dickinson, chief executive of the British Retail Consortium.
According to Paul Martin, head of retail at KPMG’s U.K. office, price is the biggest deal breaker now. “So, we are likely to see a prolonged and well targeted period of discounting as retailers compete hard for a shrinking pool of (money) and will need to clear stock,” he said.
For households to have the same Christmas arrangement as in 2019, they would have to spend 118 British pounds (149.9 U.S. dollars) more this year, according to data from the Center for Economics and Business Research.
In Sweden, customers spend more time window shopping than buying gifts. “We will not buy as many Christmas presents as in previous years. We will probably spend around 30 percent less,” shopper Petra Johansson told Xinhua.
Jessica Engdahl, head of section at Statistics Sweden’s National Accounts Department, confirmed the downward trend, adding that spending by households has been shrinking for the fifth consecutive quarter.
According to a survey conducted by the French market research and data analysis company CSA, the average budget devoted to Christmas in France is 549 euros this year, 19 euros less than in 2022.
GLOOMY ECONOMIC FORECAST
Amid the Christmas shopping season, European countries have made bleak economic forecasts, having previously lowered their economic growth expectations.
The EU’s economy lost momentum in 2023, according to the European Commission’s Autumn Economic Forecast published on Nov. 15. Thus, the commission has downgraded its economic growth forecast in both the EU and the eurozone this year to 0.6 percent. The EU GDP is projected to increase by 1.3 percent in 2024, while that of the eurozone by 1.2 percent – both figures are lower than the previous forecast.
In Germany, Europe’s largest economy, the economy is still stagnant. In October, the German government predicted a 0.4-percent contraction for this year and a 1.3-percent growth for 2024.
Loechel blamed the impact of rising energy prices and the transition to a green economy for the sluggish economy, which he expects to prevail also in 2024. No further contraction of the GDP would already be considered as satisfactory, he said.
Croatian economic expert Zeljko Hodonj stressed his country’s dependence on the German and Italian economy. “I don’t see that the economy will recover significantly in Croatia or Europe,” he said. (1 euro = 1.10 U.S. dollar)