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The European summer for recovery is more fragile than it seems



ALBUFEIRA, Portugal – Until last week, Raisa Moura and her colleagues at the reception of Pine Cliffs Resort were optimistic that life was returning to normal on the Mediterranean coast in Portugal.

Last year, when the pandemic halted travel, they were worried about the desolation of the bustling 1,300-bed hotel and villa complex. They were laid off and worked for weeks in an eerily quiet cancellation of lobby treatment. Outside, foxes brazenly roamed the deserted areas.

But this summer it was already doing well in the Algarve, Portugal’s leading tourist destination. Covid-1

9 cases have dropped so drastically that Britain has designated Portugal as a so-called green state, allowing citizens to visit it without having to be quarantined on return. The sunbeds under the pine trees were full of people picking up cocktails. The resort’s eight pools echoed with the sounds of children splashing.

“I feel hopeful,” Ms Moura, 28, said recently this afternoon. “The resort is alive again.”

But the next day, London rocked Portugal, revoking its status as a green state, citing a worrying increase in cases. Ms Moura and her colleagues prepared for a new influx of rejections. Along the coast – from the sea palaces to the restaurants on top of the cliffs to the car rental places – the people whose livelihood depends on the tourists, suddenly began to prepare for another lost summer.

“People were like, ‘Here we go again,'” Ms Moura told me the day after the news.

I traveled here from London in early June to report on what was to be the story of a country opening up to the world, an encouraging example of a Europe finally recovering from the economic catastrophe that accompanied the worst pandemic since one century. Portugal had swallowed the worst of Europe’s double recession in the first months of this year after imposing severe economic restrictions on dealing with the virus. He was now ready to collect the prize and recover faster.

But the story of Portugal’s unfolding summer turns out to be a tale of the pandemic’s stubborn resilience and volatile expectations, as the virus undermines plans to resume ordinary life. Despite the signs of progress, no one knows what will happen next – in Portugal, throughout Europe and throughout the global economy. Uncertainty forces businesses and families to be careful, to postpone investments, to slow down their travel plans and to postpone decisions while waiting for elusive security – a state of mind that could only keep the decline going.

Since the pandemic, politicians in rich countries have described the blockade as an attempt to stop the spread of the coronavirus. Governments are softening the affected workers as they wait for the threat to public health to subside. Eventually, the thinking started, they could safely bring the economy back together.

Portugal’s Doubt Season highlights how economies don’t come with built-in power buttons. Resorts are struggling to hire seasonal labor, as workers are reluctant to risk traveling to the region as long as future closures remain possible. Local workers are cautious with their money. Resorts are delaying improvements, depriving construction workers. Potential visitors need to be aware of the complexity of changing government policies regarding quarantine and testing requirements.

“It’s not just on and off,” said Pine Cliffs Resort general manager Thomas Sean. “It was a stop and a line.”

The big picture in Europe is increasingly positive. After failing the initial phase of the vaccination campaign, Europe gained momentum, allowing governments to ease restrictions. The shops are reopened in all 27 countries of the European Union, while cafes and restaurants have the right to serve outdoors. Economic activity in the services sector has increased.

Economists expect the 19 countries that share the euro to see strong economic expansion this year at 4.2%, according to a recent forecast by Oxford Economics.

Central to optimism is the reality that Europeans are increasingly on the move, heralding a potentially lucrative summer tourist season.

Within the eurozone, the use of public transport increased in May, reaching 72 percent of its pre-epidemic level, according to tracking data collected by Jefferies, a financial services company. Flight activity reached 28 percent of its pre-Covid-19 level, and visits to accommodation booking websites jumped to 110 percent of its pre-Covid level, up from 40 percent in December.

Countries that are heavily dependent on tourism seem to benefit, including Greece, Italy and Spain. No one has been in a better place than Portugal, where – before the pandemic – tourism accounted for nearly a fifth of total economic activity, according to government figures.

In the first three months of the year, when the government imposed a blockade, Portugal’s economy contracted by an alarming 3.3% compared to the last quarter of 2020 – far worse than the decline of 0.6% in the euro area.

The pain seems to have made a significant profit: From January to May, new cases of Covid in Portugal fell to less than 200 a day from more than 15,000.

“We’re already starting to see a better picture of public health, and so things are improving in the economic picture,” said Ricardo Amaro, a senior economist at Oxford Economics.

Britain’s decision to include Portugal as a green state was particularly important. The British traditionally flock to Portugal as a break from their often gloomy weather, just as New Yorkers use Florida to escape the winter.

According to the National Tourism Council, Portugal received more than 2 million visitors from the UK in 2019. Only neighboring Spain sent more.

In the Algarve – a maritime empire of villas, resorts and golf courses – the unemployment rate in the region is persistently above 10%, compared to 7.1% for Portugal as a whole. The resurgence of tourism had to correct this.

At the Quarteira fish market, the opening of restaurants generates a new demand for the fragrant brine harvest of sea bass, squid, octopus and shrimp.

“This year is much better than last,” said Asunçao Gómez as he took care of the market stall he runs with his mother.

But for most local traders, the recovery was ambitious rather than obvious.

Carlos Martins, a 41-year-old father of two, supports his family by working on a fishing boat, hauling nets full of sardines. In the summer, the price of sardines reached 7 euros per kilogram (about $ 8.50), as wholesalers arrived from Spain to take the catch. As foreign buyers stayed away last year, prices plummeted 85 percent, cutting his wages by almost as much.

“We are all waiting for prices to recover,” Mr Martins said. “When the fish is almost free, the fishermen do not receive a salary.”

Vera Galvao worked as a waitress at her father’s seafood restaurant for more than two decades when the pandemic broke out, forcing the business to close.

Most workers continue to be paid under allocation schemes in much of Europe. But when Ms. Galvao went to apply for benefits, she realized with horror that she did not meet the conditions: Her father had not paid the necessary taxes, she said.

Between May and July last year, Ms. Galvao, 41, a single mother of two, relied on loans from friends to buy groceries. She now works for a non-profit organization that collects food from supermarkets and delivers it to households in need.

“Many, many people who have lost their jobs have not yet been able to find new ones,” she said.

Continued concern about job security limits sales to local businesses by discouraging them from hiring – lean feedback.

In the waterfront cafe in Quarteira, glass shelves display freshly baked pastries – regional delicacies such as fig and almond cake and national stalls such as Portuguese egg tart. But sales are weak, owner Manuel Picaretto, 71, complained. Most of his clients are locals working in tourism.

“Instead of two sweets, people buy one,” said Mr. Picaretto.

As villa owners canceled trips last year, they gave up pool maintenance and landscaping, ravaging the books of AlgarvePool.com, a company owned by a Ukrainian couple, Iryana and Serhiy Lyashenko.

“Our incomes are falling by 75 percent,” said Ms. Lyashenko, 37

Liashenko felt hopeful when their phone rang in recent weeks. The owners of the villas were returning. Their pools and gardens were suffocated by weeds and algae. Irrigation systems needed repair.

“We think there will be more money,” Ms. Liashenko said.

A few hours later, the British government withdrew the green name of the country desired by Portugal. The news echoed like a thunderstorm on a wedding day.

“Everyone is crying,” said Claudio Lopez Meireles, a Brazilian who owns gelateria in Albufeira, using an unprintable word to describe exactly what Britain has done to local wealth. “We live on English tourists.”

In anticipation of fewer sales, he limited his purchases to imported supplies – pistachios from Sicily, cocoa from Belgium – exporting austerity to the rest of the continent.

At a nearby liquor distributor called Empro, managers pointed to a pile of 800 cans of hard cider piled up almost to the beams in a cavernous warehouse and wondered if they would find pickers before the contents ran out.

Empro relies on British visitors for more than two-thirds of its sales. Cider is one of the few products it has accumulated to meet the unique British tastes. Tourism will benefit from the newly developed Covid certificates of the European Union, which allow travel for those who have been fully vaccinated or recently tested. But Empro’s marketing manager, Susanna Cavaco, rejected a proposal by visitors from elsewhere to compensate for the loss of the British, given their legendary tendency to consume huge amounts of alcohol – beer on the beach, followed by cocktails and wine at dinner.

“No one drinks like the British,” said Ms. Cavaco.

The government in London will not re-evaluate its list of green states for another three weeks.

At Pine Cliffs, a complex of white tiled buildings perched on a perch over the sea, management is struggling to hire enough seasonal workers, leaving the property understaffed by about 25 percent, said Mr Schoen, the general manager.

Due to the need for social distancing, a buffet breakfast cannot be served, but there is a lack of staff for effective sitting service, leaving guests waiting at tables for orders.

Mr Schoen has created monetary reserves against future problems. He postponed an investment in a new children’s club and delayed a planned renovation of the restaurants.

“I believe in the good things that lie ahead, but we also need to be realistic,” Mr Schoen said. “I am not convinced that we have overcome any lumps in our way. We will continue to restrain ourselves until a good level of security is obtained. “

The next day, Britain lowered Portugal’s ranking from an approved holiday destination to a potentially dangerous breeding ground for coronavirus variants.


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