The European economy this week was mixed as first-quarter reports from banks came out. There has also been news about fewer business deals being made in the U.K.
As businesses attempt to ease restrictions, the European economy is still baffled with the region’s overall sentiment.
U.K. start-ups well funded but business looms
As per CNBC, start-ups have raised as much as US$825 million [AU$1.26 billion] during the lockdown with investors pumping capital between March 23 and April 27, more than 34% more this year compared to last year.
A few start-ups have raised hefty amounts in the last few weeks, with digital ID verification service Onfido stating it had raised US$100 million from investors on April 15.
However, the number of business deals funded by these investors have dropped significantly due to the ongoing coronavirus pandemic.
The U.K. government also announced a rescue package worth £1.25 billion for start-ups last week but concerns arise where many companies will slip through the cracks.
Andrew Roughan, managing director of Plexal urges the government to swiftly implement the package or “generations of start-ups and entrepreneurs will be lost.”
Barclays and Deutsche reports keep the economy alive
This week, Barclays reported a massive drop, falling 42% in first-quarter net profit year-on-year and opted to take a £2.1 billion [AU$4 billion] credit impairment charge, in anticipation for the fallout from the COVID-19 pandemic.
Barclays CEO Jes Staley told CNBC that they expected a drop in the consumer business but was able to compensate in other areas as he adds:
“Our consumer business was softer because of what was going on with the economy, but that was compensated for by a very robust corporate and investment bank, particularly the investment bank.”
Group income rose by 20% year-on-year to £6.3 billion, propelled by a strong performance in Barclays Corporate and Investment Bank (CIB) on the back of higher trading volumes.
In addition, the bank’s FICC (fixed income, currencies, and commodities) income jumped 106% year-on-year to £1.86 billion.
In contrast, Deutsche generated a huge revenue, recording over 6.35 billion euros [AU$109 million] in the first quarter. The bank also decided to set aside over US$280 million to deal with potential loan losses as a result of the coronavirus crisis.
James von Moltke, CFO of Deutsche Bank tells CNBC:
“We intend to continue to deliver on our cost target this year and the year to come…For sure this year will be more difficult than we anticipated but we are doing everything we can both in the management of our risk and our costs to preserve profitability.”
With the promise of the Fed to continue stimulating the markets in the West and a possible move from the European Central Bank (ECB) anytime soon, investors have yet to see the effect of the Europen economy in these difficult times.