As I've written elsewhere: governments find it pretty easy to break economies, but have little idea about how to put them back together again.
European governments have embraced and encouraged omicron panic, and they're good at it, as two surveys today showed. Germany's GfK expected consumer confidence index for January dropped 5pts to minus 6.8, which was the weakest since June. The economic outlook fell to the weakest since April, income expectations the weakest since February, and propensity to spending weakest since January. A pretty thorough axing of confidence, then.
That didn't fully show, yet, in Eurozone consumer confidence advance, which fell only 1.5pts to minus 8.3, but this was still the weakest since April 2021.
And there's much the same coming out of the UK, where the CBI's monthly diffusion index of retail sales dropped 31pts to +8, with sales for the time of year down 37pts to minus 2. CBI commented that there's a big difference in response before and after the govt's Dec 8 scare campaign started. Before Dec 8, over half of firms reported that sales were ‘up’ on last year, but after Dec 8 this fell to one third.
To be clear: this isn't the impact of the omicron variant - it's the success of European governments' attempts to scare the living daylights out of their electorates about omicron. The economic consequences will be with us for at least a couple of months, regardless of how omicron variant actually develops.
