Early last Tuesday, EU leaders agreed to an unprecedented €1.8 trillion aid and budget deal aimed at helping hard-hit members of the bloc to recover from the economic fallout of the coronavirus pandemic.

The package includes a €750 billion fund to be made available as loans and grants, and a seven-year €1 trillion EU budget.

The historic deal is viewed by many economists as good news for the European economy. The package marks a precedent for common debt borrowing at the EU level, something that many countries, including Germany, had opposed for a long time. But this resistance had softened in the wake of the COVID-19 crisis.

Meanwhile, German consumers are digging deeper into their pockets as they head into August, a closely-watch survey showed last Thursday, crediting the government’s coronavirus stimulus efforts with the lifting of spirits.

The GfK institute’s forward-looking measure climbed to -0.3 points, the third monthly increase in a row and a large jump on July’s figure of -9.4. The expected reading was -5.0.

Consumer confidence has been rising steadily since Europe’s largest economy emerged from lockdown in May and is fast catching up with pre-pandemic levels. “German consumers are leaving the corona shock from the spring of this year more and more behind,” GfK said in a statement.

The government’s July to December reduction in Value Added Tax as well as the prospect of a €300 bonus per child later this year have encouraged Germans to open their wallets, they said.

Finally, in the US, after three consecutive months of decline, the housing market is staging a recovery amid the pandemic, shrugging off high unemployment and a rising number of infections as buyers with pent-up demand seize on record-low mortgage rates. The National Association of Realtors (NAR) reported last Wednesday that sales of existing homes spiked by 20.7 per cent to an annual rate of 4.72 million in June after plunging by 9.7 per cent to a rate of 3.91 million in May.

Economists had expected sales to skyrocket by about 24.5 per cent.

But despite the substantial monthly rebound, NAR noted that existing home sales in June were 11.3 per cent below their level the same month a year ago.

This report was compiled by Bank of Valletta for general information purposes only.