Austerity snuffs out Europe's Christmas cheer

The streets of downtown Lisbon are usually ablaze with Christmas lights around this time — but this year the city has put on a somber show that matches the somber mood of austerity.

The Yuletide gloom is seen across Europe's crisis-hit southern rim, as Athens and Madrid also dim the Christmas lights in a sign of how anxious countries have become about the future.

In Lisbon, the city council has cut its festivities budget the equivalent $200,000 from $1,150,000 last year, leaving main streets short on Christmas spirit.

The frugality has inspired ingenuity. Artists invited to help Lisbon look more festive have strung up multicolored umbrellas with flashing lights over busy Chile Square. Across town, passers-by are being given sparkling lapel pins to provide their own Christmas lighting.

"With more rudimentary and low budgets, we're bringing something different to make people smile," said Catarina Pestana, who designed the umbrella lights.

Lisbon subdued

In Portugal, officials aren't just playing Scrooge with the Christmas decorations: The government is pocketing half of most workers' annual Christmas bonus — roughly equivalent to a month's pay — in a special one-off tax to help settle the country's crippling debts.

In Athens, which has suffered fatal riots against government austerity measures, authorities are mending their ways after the lavish spending of past years.

Municipal authorities say their outlay on Christmas and New Year will be one-tenth of last year's, at $270,000. That's the same as what a previous administration spent on the city's main Christmas tree, which was torched during December 2008 riots.

In struggling Spain, where the jobless rate stands at 21.5 per cent, Madrid City Council has also scaled back its seasonal spending, making do with some of last year's decorations along city avenues and using fewer lightbulbs. The total cost of $3.35 million is down 15 per cent from last year.

Stores in Madrid are slashing their prices by up to half to entice shoppers. Higher-end shops are feeling the pinch.

"Only one person came into the store on Saturday — three weeks before Christmas!" said antique dealer Dolores Sanchez

There's further evidence of changing habits and expectations in Ireland, another bailout recipient. The Celtic Tiger era of lavish office Christmas parties and generous gifts for clients is out of fashion.

"Companies are embarrassed to be seen spending on parties when they're laying people off of their jobs, and that's only going to get worse in 2012," said the Rev. Sean Healy, a Catholic priest who runs an anti-poverty lobbying group called Social Justice Ireland.

That is only half the story, though. An expected pre-Christmas hike in the sales tax to a record 23 per cent drove shoppers to Dublin stores before it came into force.

"Everything's only going to get more dear in a few days, so I'm tapping out the credit card now and taking the rest of Christmas off," said Bridget Dwyer, 52, standing in a long line to pay for goods at a Dublin toy store.

Overall, Christmas consumer spending in Ireland is forecast to fall by 9.4 per cent this year compared with a 7.8 per cent drop in Portugal, according to a recent survey by consulting firm Deloitte. But even those numbers look modest next to Greece's predicted slump of almost 25 percent.

Other EU countries offer a sobering contrast in fortunes.

Holiday spirit

In Germany, Europe's richest country, holiday spending is seen rising by close to 5 per cent. Tills were ringing at markets and stores last weekend in Berlin, where Christmas shoppers had a hard time making their way around luxury department store KaDeWe because it was packed.

There's no sign of austerity spoiling Christmas in Sweden or Denmark, either. Those countries have stayed out of the eurozone. But nearby Finns, who are in it, plan to spend $50 less each this year, an average of $650 per person, according to the Nordic region's biggest bank Nordea. France's outlay on Christmas should rise by a modest 1.85 per cent, Deloitte says. Recent fears that the eurozone's second-largest economy is being dragged into the debt mire has brought a sense of prudence.

Paris Match magazine last week listed some low-budget Christmas recipes conjured up by top-name chefs. A four-course menu included grapefruit-marinated scallops, hazelnut-dusted cod, foie gras with carrot puree, and chestnut Christmas logs. The cost: $25 per person.

In teetering Italy, new austerity measures expected before Christmas have cast a shadow over festivities. But consumer groups, tour operators and surveys indicate Italians won't be tightening their belts just yet.

Veratour, one of Italy's big tourism firms, reports its peak-season New Year's bookings are holding up well, even to Egypt, where new clashes in Cairo have scared away many visitors.

That kind of luxury is, for the moment, out of the reach of many Portuguese pockets.

Jose Cruz, a retired civil servant perusing piles of dried salted cod — the traditional Portuguese Christmas Eve dinner — in the window of a downtown Lisbon store said his family drew lots to see who would give and receive presents. In past years, they all gave gifts to each other.

And he wasn't especially hopeful of glad tidings from this week's summit of European leaders who have scrambled for more than two years to fix the continent's debt problem.

"The outlook isn't good, we can't be very upbeat, but we've got to brace ourselves and face it," Cruz said. "It's going to be very hard in 2012."

One Portuguese drinks company drew on Angela Merkel for inspiration in its Christmas ad campaign. The German Chancellor is widely regarded as both a culprit in the crisis, for not doing more to help European countries in need, and as a potential savior by providing financial aid.

Posters for Licor Beirao on Lisbon streets show a Merkel lookalike holding a bottle of the liquor and the message: "Dear Angela, Portugal is doing its best. Merry Christmas."