Volcanic Ash May Weigh on European Economy

via The New York Times

By JACK EWING

FRANKFURT — The past weekend was definitely not a good time to be a Kenyan flower grower, an Israeli avocado farmer, a package tour operator or anyone else trying to run a business that depends on air transport to or from Europe.

Consider TUI, the largest travel operator in Germany. With all the country’s airports closed because of the danger posed by a cloud of volcanic ash from Iceland, the company, based in Hanover, had to take extraordinary — and costly — steps to bring customers back from Mediterranean vacations.

Late Saturday, TUI flew 540 of its customers from the Spanish island of Mallorca to Barcelona. After staying overnight in hotels paid for by TUI, the vacationers boarded a dozen buses for a 20-hour trip to Frankfurt. From there they continued home by train.

Economists have begun considering when, and to what extent, the extra costs sustained by companies like TUI — not to mention the airlines — will start to damage Europe’s already shaky economy.

Most say the effects will not be catastrophic if the skies clear soon.

There were signs of hope Sunday as airports in Frankfurt, Berlin and some other European cities reopened on a restricted basis, at least temporarily.

But a longer spell of airport closures — or intermittent disruptions in the coming weeks and months as the volcano continues to erupt and winds carry the ash to Europe — could start to take a toll.

“Given that the recovery of the euro-area economy is anyway so weak, it might have an impact,” Daniel Gros, director of the Center for European Policy Studies in Brussels, wrote in an e-mail message.

While most economists are not predicting that the volcano will push Europe back into recession, there is a risk of unexpected consequences that could amplify the economic damage.

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