September was not kind to frdric moschetti, whose company provides equipment for big events such as the cannes film festival and grand prix races.

After eking out some work this summer when covid-19 briefly abated in france, allowing people to travel and meet, four big contracts were cancelled in two weeks.i lost 200,000 worth of work in a flash, the boss of family-owned smm events said. i try to stay positive but that was a tough blow.

The entrepreneur is not the only one struggling to remain optimistic as a second wave of the virus sweeps across europe, bringing with it new constraints on doing business. france, spain, and germany have all introduced tougher controls on movement and gatherings in recent days, while italy and the uk are preparing new measures to address a surge in infections. current restrictions are now close to the peak in june whentheeu was inlockdown, according to an analysis by ubs.

Europes business leaders are watching with anxiety. following a record 9.8 per cent contraction in oecd economies in the second quarter, many were encouraged by the summer bounce in activity as governments loosened lockdowns.

We saw over the summer an improvement in our business data, said karl gunther deutsch, head of research at the federation of german industries (bdi).

Staff numbers in factories recovered quickly in france to pre-covid levels

Information gathered by huq industries, which tracks mobile location data in real time, shows that office and factory staff in france and spain began to return to work in june and july. in germany, france, the netherlands and the uk, commuters started using public transport again.

In a sign that business confidence was beginning to stir, two-thirds of french companies did not bother to draw down the governments emergency loans, according to fabrice le sach, vice-president of the countrys employers confederation medef. in august we had surveys showing 76 per cent of chief executives were quite positive on investment and on hiring, he said.

Now, however, hopes that the summers tentative recovery would gather momentum are giving way to fears of what the winter holds. a drop in eurozone services activity last month was the latest sign of the threat to the regions economy.

Pierre-andr de chalendar, chief executive of global building materials giant saint-gobain, worries that the indicators of a second wave are pointing in the wrong direction. after a 19 per cent fall in sales in the second quarter, mr de chalender said that the french group, which has a market capitalisation of 20bn, had returned to normal in the third quarter.

While infection rates vary by country, businesses across europe are hoping governments will keep their promise to avoid a repeat of the universal lockdowns that paralysed entire industries earlier this year.

I hope governments aregoing to react in a more sensible way if there is a strongersecond wave, said mr de chalendar. we do not want the same situation as in april and may. we cannot afford that.

Ilham kadri, chief executive of solvay, the belgian materials and chemicals company whose sales tumbled by almost a fifth in the second quarter, at the peak of the crisis, agrees. although parts of solvays industrial customer base such as aerospace remained tough, the return to work in factories across europe gave the company hope that there will be light in the fourth quarter unless there is another severe lockdown, said ms kadri.

But some fear even limited restrictions risk destroying the fragile consumer confidence that had begun to take root during a fleeting few weeks this summer.

Europes leisure and hospitality sectors made up of millions of small businesses are already feeling the impact even of early closures of bars and restaurants, never mind outright shutdowns as in paris recently.

For jens zimmer christensen, president of the european restaurant, caf and bar association, hotrec, and owner of the 64-room hotel maritime in the danish capital copenhagen, the equation is a brutally simple one.

When restaurants close...people get scared, he said. closing restaurants and bars early means people dont go out.

While europes industrial sector is also affected by an erosion of confidence, there are signs that manufacturers will weather a second wave better than the first time round.

The surprising thing for us is that the industrial side of the business hasimproved over [the] last two months, says tony smurfit, chief executive of smurfit kappa, europes largest paper packaging company. most of our industrial customers are saying they hope for a much better year next year.

Solvays ms kadri says demand from her automotive customers appeared to have stabilised, while the electronics industry continued to benefit from digitalisation. it remains quite resilient, she said.

If european businesses dread the spectre of tough lockdowns, the first wave of the virus did leave some useful legacies. for many manufacturers the procedures needed to ensure steady production were established during the spring and will smooth the process when restrictions return.

We decided to keep our crisis response team going despite the situation getting better, to be prepared for the second wave, said henrik ehrnrooth, chief executive of finlands kone, one of the worlds biggest lift and escalator manufacturers. the problem we struggled with [in the first wave] was how [to] keep the supply chain going. it took heroic measures to resolve that problem, he said, but solutions are now in place.

Both kone and saint-gobain say their decentralised management structures will be vital to navigating a second wave, given the varied responses to a resurgence of infections, not just country by country, but even town by town.

If we tried to make more decisions and steer from finland we would be several steps behind every day, said mr ernrooth.

Yet, as the virus spreads, the lack of any international co-ordination on how to respond is beginning to fuel concerns about longer-term consequences. employers federations in italy, france and germany say their members are warning that this fragmented approach risks undermining any economic recovery.

In germany, where big industries export roughly 80 per cent of their goods, the sprawl of travel restrictions in europe and across the atlantic and to china has become a serious problem in serving customers, and acquiring new contracts, said bdis mr deutsch.

Impediments to german exports quickly become a problem for the eu as well, with germany accounting for roughly 30 per cent of extra-eu trade.

Although europes stock markets have rebounded from their march lows, investors are wary. even before the resurgence in covid-19 cases, the landscape had changed for europes businesses, said thomas schuessler co-head of european equities at dws, deutsche banks asset management arm. companies on the continent had been far more aggressive in cutting their dividends than their us or asian counterparts, he said, and had loaded up on debt to survive.

A lasting legacy of covid will be the huge debt load and that you have to handle that somehow, he says.

But as businesses steel themselves for more disruption, there are more pressing concerns. many fear even the most stringent safety measures and testing cannot see off all risk as the winter flu season arrives in the middle of a second wave.

One of big dangers of covid wave two for us is absenteeism, said mr smurfit, whose packaging company is seeing an acceleration in demand from ecommerce customers ahead of the christmas season. i worry we won't have enough people to meet demand out there in q4. when people get a cold now they will think they have got covid.

Additional reporting by silvia sciorilli borelli in milan and richard milne in oslo