Speaker 1: Hello, Hello, and welcome to Stephanomics, the podcast that brings
Speaker 1: the COVID global economy to you. And the sound you
Speaker 1: just heard was the sound of lockdown lifting. In Madrid,
Speaker 1: Spain had one of the toughest lockdowns in Europe. A
Speaker 1: friend of mine tried to take a walk in week
Speaker 1: one without a dog. She was quickly escorted home by
Speaker 1: a shouty police drone. Now the restrictions are starting to
Speaker 1: be lifted, and we have a great report for you
Speaker 1: from our Spanish economy reporter Janette Newman as she reunites
Speaker 1: with friends and finds out whether her local restaurants can
Speaker 1: possibly stay in business serving a fraction of the usual
Speaker 1: number of customers at tables two ms apart. We're also
Speaker 1: going to hear from our Nordic economist Johanna Jeanson in
Speaker 1: Stockholm about the very different approach that Sweden has taken
Speaker 1: to COVID nineteen. This week, the main architect of Sweden's
Speaker 1: lighter lockdown policy admitted the death toll in his country
Speaker 1: had been too high. If he were facing the same
Speaker 1: crisis today, he told Swedish radio he would take a
Speaker 1: tougher line, whether it was right or wrong. Johanna says
Speaker 1: it's not true that Sweden acted as it did to
Speaker 1: protect its domestic economy. You can decide what you think
Speaker 1: in a few minutes, but first, here's Jeannette with the
Speaker 1: sound of Madrid reopening, and please do not adjust your set.
Speaker 1: I cursed that sound every morning for about six years,
Speaker 1: a nearby shop owner rolling up the metal shutters covering
Speaker 1: his storefront a screeching start to every day. But for
Speaker 1: two months or in the confinement in the center of
Speaker 1: Madrid where I live, the mornings were silent, so we're
Speaker 1: the afternoons and evenings. The screeching started again about two
Speaker 1: weeks ago. The sound still grates on me, but I
Speaker 1: have a bit of a soft spot for it. Now
Speaker 1: it's become a daily reminder that the city and the
Speaker 1: broader Spanish economy are coming back to life. Spain's government
Speaker 1: is gradually lifting one of Europe's strictest lockdowns in four stages,
Speaker 1: province by province, and in fourteen day increments. It's as
Speaker 1: if those of us living in Spain had been forced
Speaker 1: to go on a fast for two months, and now
Speaker 1: we're slowly reintroducing some of life's pleasures. First, a bicycle
Speaker 1: ride outside, then visits with friends and family, eating and
Speaker 1: dining out. Eventually travel in Madrid were in the second
Speaker 1: week of what's known as AS one. Most noticeably, that
Speaker 1: means madri Lanos have been allowed to drink and dine
Speaker 1: outside at bars and restaurants the first time since mid March.
Speaker 1: The sounds of the city are slowly returning. That's this
Speaker 1: Sunday before we entered Phase one. It's PM on the
Speaker 1: Plasa Santana, a square in central Madrid. And this is
Speaker 1: the next night in the same spot at the same time,
Speaker 1: but now with outdoor seating on the terraces at fifty papacity.
Speaker 1: We're also allowed to gather with up to ten people
Speaker 1: at home. That's meant reunions with friends for the first
Speaker 1: time in months. I visited friends for dinner on Friday,
Speaker 1: our first gathering since March. Hello, Hello, I get that
Speaker 1: the shared meills have been a welcome respite after the
Speaker 1: long confinement. This is a celebration. The overpowering feeling, though,
Speaker 1: is one of whiplash. Spain is a national mourning for
Speaker 1: the more than twenty seven thousand people who have died
Speaker 1: during the pandemic, and the country along with the rest
Speaker 1: of the world is emerging into the most severe downturn
Speaker 1: in living memory. Bloomberg Economics expects Spain and Italy to
Speaker 1: be among the hardest hit countries in the world this year,
Speaker 1: suffering economic contractions of eleven and respectively. That's fueled anger
Speaker 1: and despair. Some in Spain have channeled their frustration into
Speaker 1: a nightly cacophony that's known as a castro lada. That's
Speaker 1: the banging together of pots and pans, a common form
Speaker 1: of protest here. Every night for the past several weeks,
Speaker 1: people have been making noise from their windows, balconies and
Speaker 1: local plus us at nine pm. They're demonstrating against Spain's government,
Speaker 1: a coalition between the center left Socialists and the far
Speaker 1: left PODE. Most party protesters say the government responded slowly
Speaker 1: to the onset of the pandemic and that the emergency
Speaker 1: economic measures have been too little, too late. Now that
Speaker 1: we're allowed to gather with friends, many people seem to
Speaker 1: prefer to be outside their homes in the evening, So
Speaker 1: the intensity of the castro ladas has eased in recent days,
Speaker 1: but the frustrations and worries haven't. I have like a
Speaker 1: hundred messages that I have to tell. It's like two
Speaker 1: hours and then it's like it's better enough. Ophelia Marine
Speaker 1: opened three of her seven restaurants in Madrid last week.
Speaker 1: At this stage, only outdoor seating is allowed, and only
Speaker 1: at fifty capath city. She says the authorities are focusing
Speaker 1: too much on the minutia. They're missing the existential threat
Speaker 1: facing many of Madrid's restaurants and bars. We spoke at
Speaker 1: one of her restaurants, Lamul Cartman. In one of the locations,
Speaker 1: we had um twenty three tables. Okay, so now you
Speaker 1: have two cuts by half, twenty three by half, it's
Speaker 1: eleven and a half. So okay, we said we're gonna
Speaker 1: put twelve. You know, it's a big exactly, it's a
Speaker 1: big platfor we have space, it's beautiful. Not many cars,
Speaker 1: not many people. So the police comes and they removed
Speaker 1: one of them. So they had they had definitely counted
Speaker 1: exactly how many. Yes, yes, but doesn't make any sense
Speaker 1: for who what good that makes. Spain also requires restaurants
Speaker 1: to keep tables a socially distanced two apart that's about
Speaker 1: six and a half feet. Ophelia says. The number seems arbitrary.
Speaker 1: In France, social distances one meter. In Italy it's one
Speaker 1: meter in some regions and one point eight in others.
Speaker 1: In Germany one point five meters, the World Health Organization
Speaker 1: says one. Spain's government says the restrictions on occupancy and
Speaker 1: distance between patrons are necessary to ensure the country avoids
Speaker 1: new outbreaks. Restaurant managers say they support safety measures, but
Speaker 1: they say the current restrictions make it impossible to generate
Speaker 1: enough revenue to cover the cost of reopening. That's one
Speaker 1: of the reasons that more than two thirds of the
Speaker 1: bars and restaurants in Madrid that are allowed to open
Speaker 1: their outdoor terraces have remained shuttered. The average bar size
Speaker 1: in Spain is around a hundred square meters roughly a
Speaker 1: thousand square feet. The country's small, intimate eateries are part
Speaker 1: of its Old World charm, but there are distinct disadvantage
Speaker 1: in a socially distanced economy. Ophelia says she's worried that
Speaker 1: even when Madrid's restaurants can start serving inside, revenue will
Speaker 1: still suffer social distance. I think it's going to be
Speaker 1: till you know phase three four. Who knows but social distance.
Speaker 1: I think it's gonna stay for a while and which
Speaker 1: that kills us. One option would be to step up
Speaker 1: online food deliveries, but that's not as common in Spain
Speaker 1: as in some other countries. Some restaurants have tried to
Speaker 1: pivot quickly to eat commerce, only to realize the commissions
Speaker 1: on existing platforms can be as much as thirty That's
Speaker 1: untenable in an industry where margins are on average around
Speaker 1: Madrid's Restaurant Association estimates that one in ten of the
Speaker 1: city's twenty bars and restaurants could go under by the
Speaker 1: end of the year. That's a big deal in Spain's economy.
Speaker 1: Discretionary spending is a portion of economic output, meaning what
Speaker 1: people spend on food, drink and other leisure activities, is
Speaker 1: higher er than most other major economies. Also, restaurants and
Speaker 1: bars employ more people in Spain than in any other
Speaker 1: country in the European Union except Greece. That reflects, in
Speaker 1: part the vital role tourism plays in the economy. Spain
Speaker 1: was the second most visited country in the world last year.
Speaker 1: Visitors are able to return starting in July, but hotel
Speaker 1: managers say they don't expect to get back to the
Speaker 1: glory days for at least several years. Spain's islands and
Speaker 1: beachside resorts are already receiving reservations for the truncated summer season.
Speaker 1: Many hotel managers in Madrid, though, say they're likely to
Speaker 1: remain shuttered through September. They won't be able to fill
Speaker 1: their rooms without the conferences and business meetings that normally
Speaker 1: bring people in July and August. Juan Luis de Lucas
Speaker 1: Martin is an exception. The Hotel claud Age that he
Speaker 1: manages is among the few open in the city. Prince
Speaker 1: has been okay, Occupancy has been well horrible. Spaniards still
Speaker 1: aren't allowed to travel between provinces, with some exceptions. Those
Speaker 1: who have booked rooms at the cloud Edge have come
Speaker 1: to Madrid to see their doctors or lawyers, or in
Speaker 1: some cases meet up with a loved one. I understand
Speaker 1: all my colleagues. We have decided not to open until
Speaker 1: September because there will be nothing we're opening. Nearly all
Speaker 1: the adults in Madrid are closed, and our records on
Speaker 1: the best day as Albin eighteen rooms booked. If Mortel
Speaker 1: were open, it would be absolute disaster. Because there's no demand.
Speaker 1: That's eighteen out of a hundred and fourteen total rooms.
Speaker 1: A lot of workers in the restaurant and hotel sectors
Speaker 1: are expected to lose their jobs this year. That's one
Speaker 1: reason that Spain Central Bank expects the unemployment rate to
Speaker 1: hit around from an already high fourteen percent before the pandemic.
Speaker 1: The sudden loss of so many jobs has led the
Speaker 1: long lines at food banks around Madrid. Yolanda Waters Barsonia
Speaker 1: helps organize, is the one in her neighborhood of a Luche.
Speaker 1: When the virus came then it was just disastrous. All
Speaker 1: this very precarious and very unstable job was gone completely.
Speaker 1: You land another volunteers feed around families each week. All
Speaker 1: of a sudden, we had people coming in saying, you
Speaker 1: know what, I have no job, I have nothing to eat,
Speaker 1: no money to pay the rent, no money to nothing.
Speaker 1: Many who show up worked as part time waiters, cleaning
Speaker 1: homes or taking care of the elderly, but some neighbors
Speaker 1: are too embarrassed to join the queue for the bags
Speaker 1: of food. One day we saw somebody picking some fruit
Speaker 1: from that that's been behind this fruit shop here, and
Speaker 1: we told this man why don't you come, we have
Speaker 1: so much food and said, no, my wife doesn't want
Speaker 1: me to be there on the queue. We don't want
Speaker 1: we we can we we live here all our life.
Speaker 1: How can we be on that queue? So it's really humiliating,
Speaker 1: really really. Some of the waiters and other workers have
Speaker 1: been temporarily laid off, but they still haven't received their
Speaker 1: furlough payments, so they can't pay their bills. Spain's furlough
Speaker 1: and unemployment system has been overwhelmed during the crisis. As
Speaker 1: the virus has slowed, it spread and Spain's economy slowly reopens,
Speaker 1: Yolanda says the number of new people queuing at the
Speaker 1: food bank has also slowed, but the future still remains
Speaker 1: bleak for many. Ninfa Sanchez Diaz had been working thirty
Speaker 1: hours a week taking care of elderly people in their homes.
Speaker 1: Since the pandemic, she's been working half at and isn't
Speaker 1: earning enough money to pay rent or feed her family. Well,
Speaker 1: the future looks green if we have more quarant times
Speaker 1: and with social distancing, and with the number of elderly
Speaker 1: people who have died. I don't know what kind of
Speaker 1: hiring or firing or jobs will be available. I don't
Speaker 1: know what's going to happen. We'll live for today and tomorrow.
Speaker 1: We'll see. Amid so many and certainties, one thing seems clear.
Speaker 1: The V shaped recovery that economists had anticipated from many
Speaker 1: countries now seems unlikely. In Spain and elsewhere. It will
Speaker 1: be more of a slog than a snap back. Jeanette
Speaker 1: Newman bloombergs so, Spain is one example of a European
Speaker 1: country now starting to emerge from from lockdown. But of
Speaker 1: course we know in Europe that Sweden has taken a
Speaker 1: very different approach, and I thought it was about time
Speaker 1: that Stephanomics found out a bit more about that from
Speaker 1: our Nordic economist, Johannah Janson. Johannah, very nice to have
Speaker 1: you back on Stephanomics. Tell us a bit about Sweden.
Speaker 1: I mean, I think we are all familiar now with
Speaker 1: the idea that Sweden has had a looser approach to
Speaker 1: locking down the economy. That does seem to have helped
Speaker 1: sustain economic growth, at least in the first few months
Speaker 1: of the year. But how are things looking now, Yes,
Speaker 1: that's right, I mean, it's it's it's really true that
Speaker 1: Swede has had a different approach, and the main difference
Speaker 1: I think is that a lot of the measures that
Speaker 1: are that are imposed here are voluntary, and I think
Speaker 1: that means that it may look a bit more lax
Speaker 1: seen from the outside than what we are experiencing here.
Speaker 1: But it is true that it is less strict than
Speaker 1: than in most countries. If we look at, for example,
Speaker 1: that stringency index that Oxford Oxford University has compiled. Uh
Speaker 1: that index is around fifty in Sweden and it's eighty
Speaker 1: in other European countries. So so for sure that's less strict.
Speaker 1: And yes, you're right, Stephanie, it's been we've had less
Speaker 1: of a hit to the economy in the first quarter,
Speaker 1: when when most all the Nordics, Norway, Finland and also
Speaker 1: the euro Area countries took a large hit somewhere down
Speaker 1: to percent quardroom quarter, Sweden actually managed to eke out
Speaker 1: point one percent growth. But but will we will take
Speaker 1: a hit in the second quarter, I'm sure of that,
Speaker 1: but it will probably be less less deep than we're
Speaker 1: seeing in in other European countries. And just thinking about
Speaker 1: global markets, I mean, we know that Sweden is a
Speaker 1: very exposed economy, very involved in global trade, has been
Speaker 1: affected by the downturn in the global economy. When you
Speaker 1: look at these sort of high frequency things, are you
Speaker 1: starting to see some some green shoots in terms of
Speaker 1: the external activity or is it too soon? I think no,
Speaker 1: not in terms of the external activity. Actually, if we
Speaker 1: look at the when we look at those high frequency indicators,
Speaker 1: it's mainly that they've turned for the better. Firstly in
Speaker 1: terms of the number of new cases. We're seeing a
Speaker 1: slight downturn there. Secondly in terms of mobility domestic mobility,
Speaker 1: that people are daring to go to the store which
Speaker 1: they didn't do before, or they they're starting to take
Speaker 1: their car to work. Um, they're still not h taking
Speaker 1: the subway, but they're taking their car to work. And
Speaker 1: we're seeing less financial stress. So these are the main
Speaker 1: three green shoots. But no, not in terms of external demand,
Speaker 1: and I think those effects will linger for longer. If
Speaker 1: we look at UM it's not high frequency indicators, but
Speaker 1: it's relatively fast indecurations in terms of purchasing managers index
Speaker 1: for for the export sector, for example, we're seeing small
Speaker 1: fish hooks uh slight slight recovery, but quite an unimpressive
Speaker 1: recovery in the last figures, So there's still a worsening
Speaker 1: in terms of they're more companies seeing a worsening of
Speaker 1: them and worsening of order intake. But the worsening has
Speaker 1: um has slowed down. That's where we are in terms
Speaker 1: of export demand. And not wanting to stray too far
Speaker 1: off economics, but I'm interested in how you and your
Speaker 1: friends and family have have thought about the so called
Speaker 1: Swedish experiment. Are people sitting in Sweden thinking, yeah, our
Speaker 1: government was very smart and very brave and they've taken
Speaker 1: the right decision, or or are there are there a
Speaker 1: lot of worries because obviously there has been a much
Speaker 1: higher mortality rate and a lot, no more cases than
Speaker 1: in your Nordic neighbors. Yes, definitely. I mean I think
Speaker 1: in all countries there's been a debate on what to
Speaker 1: do and what not to do. And because this pandemic
Speaker 1: mixes economic reasoning with fear and worries about family and relatives,
Speaker 1: so there's been a lot of debate amongst sciences here
Speaker 1: and among citizens. But I think the reasons for Sweden's
Speaker 1: lacks approach has not been I mean, herd immunity has
Speaker 1: not been the main reason. Neither has economics. It's more
Speaker 1: been an effect of the Sweden's constitution, which says that
Speaker 1: the government is not in charge here, it's the public
Speaker 1: health authority and they've they've taken the decisions. So and
Speaker 1: so that's been the thing, and also I guess a
Speaker 1: cultural thing that Swedes are. We're not We're not used
Speaker 1: to we're not imposing laws when it comes to containment measures.
Speaker 1: We're instead we're asked to work from home, we're asked
Speaker 1: not to travel too far from our domicile. So and
Speaker 1: people seem to be adhering to those advice. But you're right,
Speaker 1: mortality has been higher. The last numbers show that mortality
Speaker 1: per million inhabitants here is around four hund and forty,
Speaker 1: which is four times higher than in Germany. It's less
Speaker 1: than in the UK, and it's less than in Italy
Speaker 1: for example, but much higher than in the Nordic neighbors
Speaker 1: and in Germany for example. So and that's been that's
Speaker 1: also part of the debate. And in fact, now that
Speaker 1: the government has just said that they will open an
Speaker 1: inquiry into how this COVID nineteen pandemic has been handled,
Speaker 1: so the debate will continue. I'm sure that's very interesting.
Speaker 1: You said something I have to be I didn't know,
Speaker 1: which is that this is partly about because the public
Speaker 1: health authorities have been the ones constitutionally in charge. Yes,
Speaker 1: So I think the outside, the perception and possibly particularly
Speaker 1: among people who thought that other countries should have taken
Speaker 1: this approach, was that Sweden had been very cool and
Speaker 1: calculated and was putting a long term view of the
Speaker 1: economy ahead of the short term human consequences, or very
Speaker 1: least weighing the two things in the short term somewhat differently.
Speaker 1: But the suggestion from what you're saying is this was
Speaker 1: actually taken. This was a decision based on the long
Speaker 1: term yest public health costs and benefits. Absolutely, and I
Speaker 1: think a lot of this I mean, as I said,
Speaker 1: economics has never been cited as a reason for this
Speaker 1: more relaxed lockdown. Ah. And the Swedish constitution prevents the
Speaker 1: government from interfering in the strategy of independent administrative bodies
Speaker 1: that could be the RIX Bank, now it's the public
Speaker 1: health authority. So yes, and it's also one the main
Speaker 1: argument i'd say is, as you say, the overall public
Speaker 1: health but also the egalitarian approach. For example, a Swedish schools.
Speaker 1: Primary schools have been kept open. Secondary schools have been
Speaker 1: closed in universities have been closed, but primary schools have
Speaker 1: been kept open. And the argument there is that it's
Speaker 1: much tougher for households are less well off to care
Speaker 1: for children at home and keep them get them back
Speaker 1: into the schooling mode. One school is open again, and
Speaker 1: so that's been an important argument throughout this crisis. I'm
Speaker 1: slightly worried that we're going to come to the same
Speaker 1: conclusion that we always come to about, particularly about Sweden
Speaker 1: but also sometimes the other Nordic economies, that they do
Speaker 1: things better than we do, but we wouldn't be able
Speaker 1: to do the same thing that they may be. So yes, well,
Speaker 1: I mean, because the conclusion you might draw is that,
Speaker 1: as usual, Sweden has turned out to be quite shrewd
Speaker 1: and smart in its approach, as well as having in
Speaker 1: quite a inclusive attitude to its citizens worrying about the
Speaker 1: welfare of citizens. But it does rely, as you mentioned
Speaker 1: at the start, on people not only having that sense
Speaker 1: of fellow feeling but also doing what they're voluntarily encouraged
Speaker 1: to do, as opposed to told being told, you know,
Speaker 1: we can't help wondering that the voluntary approach to lockdown
Speaker 1: in the US and the UK would have been a
Speaker 1: bit less successful. Yes, one of my we may never know.
Speaker 1: But also I think a worrying sign though, is that
Speaker 1: high mortality rate. That's that's going to be. I think
Speaker 1: once this year passes and once we see which countries
Speaker 1: have fared in total mortality, that will be like the
Speaker 1: final verdict over this how we've handled this pandemic, because
Speaker 1: as it is, as it stands now, this this relatively
Speaker 1: high mortality rate for Sweden must be seen as something
Speaker 1: that's that's not a success in this in this pandemic.
Speaker 1: I love the idea, Johanna, of the fish hook recovery.
Speaker 1: You know, we've been talking about the bees and the ws,
Speaker 1: but of course our Nordic, our Swedish economist talks to
Speaker 1: us about fish hooks. I like it, Johanna, Thank you
Speaker 1: very much. We will, as you say, we will need
Speaker 1: to wait a year to see really, uh what how
Speaker 1: things have panned out, but I suspect we'll have you
Speaker 1: on the program before then. Thank you very much, Stephanie.
Speaker 1: Thanks for listening to Stephanomics. We'll be back next week
Speaker 1: with more on how COVID nineteen is turning the global
Speaker 1: economy upside down, and remember you can always find us
Speaker 1: on the Bloomberg Terminal, website, app, or wherever you get
Speaker 1: your podcasts. This episode was produced by Magnus Hendrickson. Special
Speaker 1: thanks to Jeanette Newman, Johanna Jeanson, Laura Milan, and Thomas Galtieri.
Speaker 1: Lucy Meekin is the acting executive producer of Stephonomics and
Speaker 1: the head of Bloomberg podcast is Francesca Levy.