United in pessimism

  • After three months of the Russian invasion of Ukraine, Europe’s economy is in a very unstable state, making it the right moment to check the pulse in Germany, France and Italy. In May, we at Allianz decided to interview 1,000 people in each country about their views on political and economic issues, as well as their expectations for the future.
  • United in pessimism: The majority of respondents consider the current economic situation to be bad. There is still, however, a large gap between German respondents on the one side (net percentage: -16%), and French and Italian respondents on the other (-46% and -48%, respectively). This is rather surprising, given the German economic model’s dependence on cheap energy from Russia, which makes the country more vulnerable than the other two. Moreover, for the first time in our Pulse surveys, the assessments of the future are even gloomier than those of the present in all three countries. Hope for better times is vanishing.
  • The war is still far away: Health and economic issues such as jobs and inflation continue to dominate the thinking of the majority of respondents. The differences between the countries speak for themselves: In Germany, inflation is the top issue on the minds of respondents (57%); in Italy, it is by far concern about jobs (72%), while French respondents still seem to have the Covid-19 shock on their mind (62%). But there is unanimity on the topic of geopolitics – it plays only a minor role for most respondents. In both Italy and Germany, it appears only in fifth place; in France, this topic even ranks among the “least important”, after concerns about terrorism and immigration.
  • Not only for the poor: There is a broad consensus that governments should take action against inflation: only a very small minority of less than 5% among all respondents believes that doing nothing is the best option. In terms of instruments, there is also generally strong support for price controls and tax cuts. In contrast, only about 10% of respondents are in favor of targeted support for vulnerable households; (expensive) blanket measures such as tax cuts have about three times more support. Surprisingly, targeted support finds the least acceptance among low-income households – the potential beneficiaries of such measures – perhaps out of a  fear of ending up empty-handed (the so-called FOMO syndrome).
  • Divided by the euro: Although the majority of respondents in all three countries expect the Ukraine war to increase solidarity among EU members, fundamental views on the EU and the euro remain as if set in stone. German respondents continue to be consistently “pro-European”– supporters of the EU and the euro are in the majority (net percentages of +15% and +5%, respectively in 2022). France (-15% and -13%, respectively) and Italy (-5% and -20%, respectively), on the other hand, paint a diametrically opposed picture: the “anti-Europeans” are in a stable majority. At least in Italy, the rejection of EU membership has weakened somewhat in the last two years. But this does not apply to the euro: 44% of Italian respondents see more disadvantages than advantages in the euro. The common currency remains a boon for populists on the Apennin.
  • A new generational fault line: One legacy of the Covid-19 crisis is a significant increase in debt. Only a small minority of about 15% of the respondents seem to adhere to the "New Monetary Theory," i.e., paying no attention to the debt problem and advocating a permanent suspension of debt rules. In this respect, there is unanimity among the age groups. Otherwise, however, the approach differs significantly. While the majority of younger respondents are in favor of a consistent debt reduction (35% in Gen-Z), this proportion drops to about half in the boomer generation (18%). In contrast, the opposite is true of attitudes toward the mutualization of debt: Older respondents in particular are in favor of this step (35%), while Gen-Z respondents are significantly more skeptical (23%). The debt problem feeds part of the younger respondents' anxiety about the future; if not handled properly, it could increase intergenerational inequality.
  • Open (only) for friends: The question of the advantages and disadvantages of globalization has always been a bone of contention among Allianz Pulse respondents. The majority of French respondents are consistently “opponents of globalization” (net percentage of -15% in 2022) while the majority of German respondents are consistently “globalization supporters” (+20%); Italian respondents fall between these two poles (-0%). However, these different attitudes are only weakly echoed in the question about the future shape of globalization, which asks about preferred trading partners. The globalization-skeptical French respondents show the greatest inclination to limit trade to the EU from now on (22%); among the German and Italian respondents, this percentage is 15%. However, only a small minority of respondents – 9% in France, 8% in Germany and 12% in Italy – would like to see brisk trade with Asia and Africa. On the other hand, significantly more respondents would like to be as indepentent as possible (24% in France and Italy, 19% in Germany). The respondents obviously want a new mode of international division of labor.
  • Holding course to Net-Zero: Given the looming energy crisis, with ever-rising prices and possible rationing, there are many voices that claim that the decarbonization of the economy will have to wait for now. Among our respondents, however, only about one fifth to one quarter hold this position. The large majority – 39% in France, 46% in Germany and 47% in Italy – is not willing to sacrifice decarbonization to the altar of energy independence. Another surprise, given the recent surge in energy prices, is that the number of those in favor of carbon prices has almost doubled compared with the previous year. Although it still remains at a relatively low level, 17% of French respondents (2021: 9%), 16% of German respondents (8%) and 19% of Italian respondents (11%) now hold the opinion that pricing carbon emissions is the best means of combating climate change. Respondents continue to place the most trust in researching and developing new technologies (37% on average).
  • Money and climate protection don‘t mix well: Only relatively few respondents – 21% in France, 23% in Germany and only 13% in Italy – are fundamentally unwilling to do anything personally to combat the climate crisis, ranging from changing diets and travel patterns to retrofitting homes. The willingness to pay for climate-friendly products, however, remains subdued, to put it mildly. Overall, only slightly more than 10% of respondents would be willing to accept price increases of over 10%. However, there are significant differences between the generations. Among Gen-Z respondents, this share is 19%; among those from the boomer generation, it falls to 5%. The major challenge in the coming years will therefore probably lie less in the transformation as such than in the question of how to shape a just transition.


Arne Holzhausen
Allianz SE