“The flash eurozone PMI indicated another substantial easing of the region’s downturn in June. Output and demand are still falling but no longer collapsing. While second quarter GDP is still likely to have dropped at an unprecedented rate, the rise in the PMI adds to expectations that the lifting of lockdown restrictions will help bring the downturn to an end as we head into the summer.

France has even staged a tentative return to growth, albeit having suffered a steeper decline at the height of the COVID-19 pandemic than Germany. Germany and the rest of the euro area meanwhile saw welcome moderations in rates of decline. “However, with the timing of a return to normal still something that can only be speculated upon, and virus-related restrictions likely to continue to hit many businesses for the rest of the year, we remain very cautious of the strength and sustainability of any economic rebound.

“The job market remains a particular area of concern, especially if demand fails to pick up sharply in coming months. We therefore continue to expect GDP to slump by over 8% in 2020 and, while the recovery may start in the third quarter, momentum could soon fade meaning it will likely take up to three years before the eurozone regains its pre-pandemic level of GDP.”