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The pandemic takes a large toll on Europe

Europe has suffered significantly from the spread of Covid-19. Its current problems securing vaccines will prolong the European Union’s economic crisis.

Europe has suffered significantly from the spread of Covid-19. Its current problems securing vaccines will prolong the European Union’s economic crisis.

by
Charles Stanley

in Features

22.03.2021

Europe has endured one of the worst experiences of the pandemic worldwide, with high case rates and all too many deaths. By 18 March, the European Union’s official figures showed 24 million cases to date and 577,000 mortalities. All seven of the countries that have recorded more than 1,900 deaths per million from Covid-19 globally are on the European continent. Four are EU members.

Last week saw worse warnings of a third wave of the disease in France, Germany and Italy. A reluctant President Macron was forced into a further one-month lockdown for a heavily-populated area from Calais to the Paris basin and a smaller area by the Mediterranean. Germany extended its current shutdown until at least 28 March.

The German federal and lander governments will meet to discuss extensions and tougher measures into April. Italy has demarked around half the country as red zones with tough rules from 15 March to 5 April – including Rome, Venice and Milan. There will be a national lockdown for Easter.

The EU is going to take longer to recover – and see further scarring of the exposed areas of the economy in tourism, leisure, entertainment, non-food shop-based retailing, sport and hospitality.

Vaccine woes

The EU’s troubles in combatting the virus have been compounded by delays and difficulties with their vaccination programmes. Various countries claimed the successful and available AstraZeneca vaccine would not be sufficiently effective for the elderly, putting off some of the people who could most benefit. They then changed their mind and accepted the overwhelming medical opinion that it worked.

More recently, several EU countries stopped using the AstraZeneca vaccine whilst they sought more details of blood-clotting incidents, despite the Regulators assuring them there was nothing of concern. They have alternated these pauses with running complaints that the Anglo-Swedish pharma group had not delivered enough of the vaccine for their liking.

Some of the problem stems from the EU’s legal base. The EU is founded on three freedoms, freedom of movement for capital, goods and people. During the pandemic, one of the EU’s main preoccupations has been to keep the internal borders between member states open to reinforce the message that the EU as a whole is the responsible area and authority. There were disputes with individual member states when some wished to close borders or restrict flights and other movements within the EU to limit the spread of disease from one state to another.

The EU became involved in the procurement of protective clothing and medical equipment to help fight the virus but did so in supplementing national government programmes. It became concerned when some member states thought of imposing bans on exports to other member states to tackle their own shortages.

The EU was very keen to assume prime responsibility for vaccine development and procurement. Some National Health Service departments of member states governments were reluctant to cede this territory, but most including France and Germany were persuaded to do so.

Political consequences

The EU was a bit slow in appraising and ordering vaccines and did not order sufficient firm early supply to meet likely needs. It compounded the difficulties by its Regulatory Agency taking longer than some others to approve vaccines that had been thoroughly tested and approved elsewhere, delaying the EU’s ability to take delivery of the successful first products to emerge. This has now become the centre of some bitter disputes between member states and the EU, and within the national democratic debates in individual countries.

Opposition parties are ready to use delay and indecision against incumbent governments. In Germany, even the recently elected leader of the CDU, the party of Angela Merkel, blamed the poor performance over vaccines for a couple of recent poor election results for his party.

So, what is the investment impact of all this? It means delay in getting a decent EU economic recovery, with more losses of income, jobs and businesses in the meantime. It is drawing the EU into detailed intervention with vaccine-making companies seeking to direct their sales and exports which causes trade issues.

It means more political uncertainty as incumbent governments face further criticism for their handling of the virus, which includes the perceived shortcomings of the EU-wide vaccine policy. In the east of the Union, some countries are looking to the Russian vaccine as a possible faster way out, which does not please the EU core.

As the virus spread shows us, getting most people vaccinated is still the best – or maybe in some cases the only – way out of lockdowns. The issue of who will replace Angela Merkel and which parties will form a new coalition government in Germany after the September election has become even more difficult to forecast.

Nothing on this website should be construed as personal advice based on your circumstances. No news or research item is a personal recommendation to deal.

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