PARIS: Senior European officials fear that the worst terror attacks in over a decade on their soil could compound the social and economic problems which the eurozone is already facing.
Tourism in Europe accounts for more than 320 billion euros in revenue and 7.8 million jobs depend directly on tourism, 20 million indirectly. Travel and leisure companies are the worst hit in the aftermath of the Paris attacks.
The Euro Stoxx 60 Travel and Leisure index saw 2.6 billion euros wiped off its value immediately after the attacks and companies such as hotel group Accor plunged and Air France KLM saw shares plunge as much as 6%.
Vice President of European Central Bank Vitor Constancio predicted that the events would hurt investor confidence. “It can compound all the problems that we were already facing,” he said.
Its clear these sort of events do not help restoring confidence in the recovery, so this is something we will watch, Peter Praet, the ECBs chief economist, said.
Frances is the eurozone’s second largest economy and the worlds most popular destination for international tourists, attracting about 84 million visitors last year.
According the World Travel & Tourism Council, tourism accounts for around 9% of Frances gross domestic product (GDP) directly and indirectly and 10% of its total employment.
Economists say a serious damage to tourism would hit Frances struggling economy. Meanwhile, ramped-up security measures could disrupt business and dent consumer confidence, exacerbating the situation.
President Francois Hollande has declared a state of emergency for three months and called for a temporary suspension of the Schengen free movement system.
The attacks came in the run-up to a festive season ahead of the New Year, leading to temporary closures of the Eiffel Tower and Disneyland Paris which normally draw multitudes of visitors.
There are reports of empty trains and planes on the way to Paris and full cars and cabins on the way out.
European officials are at great pains to play down the gloom, stating that the attacks are likely to have “transitory effect on the economy”.
“If there would be no further consequences, the impact would not be very significant,” Constancio said in Frankfurt.
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