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How COVID-19 has impacted the European economy

Want to learn more about the coronavirus’s economic impact in Europe? N26 and the ifo Institute launched a monitor to learn how the COVID-19 pandemic affected the European economy.

5 min read

In early 2020, the COVID-19 pandemic upended life as we knew it. One of the largest impacts was on the economy, which suffered its most significant setback since the Great Depression. Yet with vaccine rollouts accelerating and warm weather on its way, hope is definitely on the horizon.  

At N26, we want to build a better banking world for everyone. Part of that is diving deep into economic topics that impact our customers, and spotting trends that help us create meaningful solutions for them. That’s why we teamed up with the ifo Institute for Economic Research to launch the ifo-N26 Economic Monitor, showing how private income, spending, and savings across Europe have been affected by the pandemic. 

We’ve compiled our findings in a new report on the economic impact of coronavirus in Europe over the past year, and the financial challenges that our customers are facing today. Combined with N26’s in-depth insights on evolving customer habits, the report paints a picture of the economic recovery across Europe’s four largest markets—Germany, France, Spain, and Italy. And we have good news—the results are even better than you might expect. Read on to find out what we learned.  

What we’ve learned about the economic impact of the coronavirus

There’s no sugarcoating it—last year was hard on the economy. However, we discovered that consumer spending bounced back quickly. Although spending dropped between 50% and 60% across Germany, France, Italy, and Spain during the first lockdown in April 2020, it stabilized across all four markets as the year went on. Here’s what our research found: 

  • After dropping to 60% below typical spending in the first lockdown, Germany reached about 85% of its pre-pandemic spending in the second lockdown—a recovery of +42% 
  • France made the highest jump in spending recovery, rising to 80% after dropping about 50% in the first lockdown—making a +60% recovery 
  • In Spain, spending dropped to 50% below average in the first lockdown and then went up to 75% in the second lockdown—showing a recovery of +50%
  • Spending dropped to 50% below average in Italy during the first lockdown and then rallied to about 70%—a recovery of 40%

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The German economic recovery was the most impressive, with consumer spending today just 15% short of its pre-pandemic levels. Spain fared well too—after spending dropped to 50%, it jumped back up to 75% of its usual average by November. 

The French also have cause for celebration, where consumer spending increased the most of all countries between the two lockdown periods. After an initial drop to 50% of pre-pandemic spending, it rose 80% between the first and second lockdown. Finally, after being hit particularly hard by the coronavirus, even spending in Italy has improved, and they’re now back up to 70% of pre-pandemic levels—an impressive recovery of 40%. No matter how you spin it, the economic signs are encouraging to say the least. 

How the coronavirus pandemic affected consumer saving

If that doesn’t have you feeling hopeful, there’s even more good news. Despite the impact of the coronavirus on the economy, our study found that consumer savings increased sharply in 2020 across all four markets. 

A year after the first lockdown, European customers have accumulated savings throughout 2020 and the start of 2021, most likely due to multiple lockdowns and the increased health risks that impacted spending. Residents of Germany and Spain saved the most, with German customers saving 42% more at the end of 2020 compared to January 2020, which accelerated further to 50% by the end of March 2021. Spanish customers followed closely, saving 38% more than in the year prior, and 42% more by the end of March 2021. French and Italian customers also put more money away than usual, both saving 30% more compared to January 2019. Notably, N26 also saw an increase in the use of Spaces, our money-saving sub-accounts. 

With vaccinations underway and European markets on the mend, there are lots of reasons to feel optimistic. Plus, the coronavirus pandemic has also accelerated some lifestyle changes that many have embraced, like increased access to working from home. Our own research at N26 also found that contactless and mobile payments—an easy, hygienic alternative to cash—increased among European customers. In Spain, the use of mobile payment methods like Apple Pay and Google Pay jumped to 79%, while we also saw a 74% increase in mobile payments in France. 

As a 100% mobile bank, we’re not surprised that these trends are catching on. In fact, we’ve always believed in creating a banking solution that’s easy, safe, and convenient. That’s why every N26 bank account offers a contactless Mastercard enabled for cashless payments, online transactions with real time push notifications, and more—all right from your smartphone. Plus, if your pandemic savings have inspired you to keep putting away money for a rainy day, we’ve got you covered with N26 Spaces—our unique saving feature that lets you save money easily, whether for a post-covid vacation or a larger purchase down the line. No matter who you are or how you spend, N26 is by your side as we embark on this next, more hopeful chapter.

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Your money at N26

As the economy bounces back from COVID-19, N26 is here to help you take control of your finances. Forget carrying around cash or even a bank card—simply make cashless payments right from your smartphone in seconds. With N26, online transactions and payments are simple—and with instant push notifications after every transaction, you’ll never have to wonder about your account balance. Plus, set money aside with Spaces sub-accounts to save for the unexpected, or just a lavish vacation as soon as lockdown ends!

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