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Economists say Europe is better able to withstand the Covid winter wave

Movement restrictions to stem a surge in new coronavirus cases across the EU are expected to have a milder impact on growth than previous waves as they target a smaller segment of the population: those unvaccinated people.

Last winter, the euro zone was back Depression as output contracted for two straight quarters after a wave of the epidemic prompted authorities to re-introduce strict regulations restricting people’s movement.

In recent weeks, cases of Covid-19 in Europe have rise to their highest 14-day rotating average in nine months, and in several countries – including Germany, Austria and the Netherlands – have hit records. This raises doubts about the region’s economic recovery.

However, economists say a return to strict sanctions is unlikely when almost two-thirds of the EU population are fully vaccinated, which means mortality rates are high. and the rate of intensive care workers did not increase with infection rates.

Graph showing growing Covid cases, ICU capacity and deaths in Western Europe.  Application rates in Belgium and the Netherlands are higher than in the UK and German ICU admission rates are twice as high as in the UK

By focusing many of the latest restrictions on the unvaccinated, they believe authorities can avoid crippling the economy again, while encouraging those who are hesitant to finally get the jab. On Sunday, Alexander Schallenberg, the Austrian chancellor confirmed that the federal government is imposing nationwide lockdown for those who weren’t stabbed, effective Monday, added: “We have to raise vaccination rates. It’s embarrassingly low.”

Katharina Utermöhl, economist at Allianz, said of the possible economic impact of the new Covid-19 wave on the European economy: “At this stage, we expect consumption to decline. but not derailed.

“It will be another terrible year for [in-store] Retail sales are over Christmas, but a lot of it will go online and we think restaurants, travel and accommodation will continue to do better.”

Shops, eateries and entertainment venues have experienced a drop in customers since the latest Covid-19 spike. Footsteps in the euro area’s retail and leisure sectors have recently fallen below pre-pandemic levels, while remaining above last winter’s lows, according to Google Mobility data. by Google Mobility.

This has contributed to a decline in short-term growth expectations for the eurozone economy in the final months of 2021. But most economists expect the economy to slow, but not. is the contract. European Commission last week forecast Growth in the euro area will slow from 2.3% in the third quarter to 0.8% in the final quarter.

Economists say the main cause of the downturn is supply chain bottlenecks that are limiting manufacturing output, and sharply rising inflation that is eroding people’s disposable income. Eurozone inflation hit a 13-year high of 4.1% in October.

“I don’t think restaurants will be empty again, as this virus will have only a modest impact,” said Holger Schmieding, chief economist at Berenberg. “The biggest risk to growth is the supply chain.”

He said the increase in new virus infections and new regulations being put in place in some countries restricting unvaccinated people’s access to many places and activities, could have a negative impact. use “self-regulation” by encouraging more people to get vaccinated.

Parts of Austria and Germany have restricted access to restaurants, gyms, cinemas and sports arenas to those who have been vaccinated or who develop immunity after recovery. from the virus – except those who have recently tested negative have been granted access.

A person shows a QR code for online registration for the Hellbrunn Magic Christmas Market in Salzburg
A person displays a QR code for online registration for the Hellbrunn Advent Magic Christmas Market in Salzburg © Barbara Gindl / APA / AFP via Getty Images

The Netherlands plans to adopt a similar “2G mode” after a three-week limited lockdown, during which many public events and entertainment venues are forced to close and restaurants and shops are not needed. must close in the early evening.

Mark Rutte, the Dutch prime minister, said on Friday: “Tonight we are delivering a very unpleasant message with very irritating and far-reaching measures. “The virus is everywhere, and therefore must be fought everywhere.”

Austria’s Schallenberg said the restrictions mean that a third of the country’s population has so far resisted vaccinations can expect Christmas to be “uncomfortable”. “I don’t understand why two-thirds of the population lose their freedom because another third hesitates,” he said.

After the new coronavirus cases in Europe hit a record high of 2m last week, German Chancellor Angela Merkel said she was “very worried” about the situation and urged a third of Germany’s unvaccinated population to ” rethink”. Mrs. Merkel and regional leaders will discuss potential nationwide measures to deal with the virus on Thursday.

In France, coronavirus infections jumped 40% last week – described by President Emmanuel Macron as a “warning sign”. But Anne-Sophie Alsif, chief economist at consulting firm BDO France, said the recovery would be “very strong this year and into 2022 as household consumption remains high, investment and exports remain strong, and investment and exports remain strong.” is working well”.

Denmark, which in September became one of the first EU countries to lift all coronavirus restrictions, on Friday reintroduced the Covid-19 passport for entry into many indoor spaces and events.

But Helge Pedersen, chief economist at Nordea, said he did not expect this to have a “major impact” because most of the population has been vaccinated and Denmark has a large testing capacity.

Christian Fürtjes, economist at HSBC, said the recent stabilization in infection numbers at high levels in the UK, where the latest wave of the virus started earlier than in most of Europe, suggests similar stability. may soon happen on this continent.

“If that were to happen, then most governments would be very cautious about reintroducing severe sanctions, because they fear the harsh economic impact and they know that most people,” he said. are fed up with these restrictions.

Additional reporting by Richard Milne in Oslo, Eir Nolsoe in Paris and Sam Jones in Zurich

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