Analysis: The brakes caused by the delta cloud the prospects for European recovery

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People, wearing face masks, walk past a closed restaurant in Paris amid the coronavirus disease (COVID-19) outbreak in France, May 6, 2021. REUTERS / Sarah Meyssonnier / File Photo

  • The Mayor cites the Delta risk for growth
  • Germany to maintain COVID-19 rules for now
  • Reopening in English closely watched across Europe
  • England emboldened by high number of vaccinations, drop in deaths

PARIS, July 13 (Reuters) – Rising coronavirus infection rates, driven by the rapidly spreading Delta variant, are forcing more countries in Europe to reimpose restrictions that could cloud the region’s prospects for economic recovery .

French President Emmanuel Macron’s announcement on Monday of mandatory proof of vaccination or negative tests for public spaces, including cinemas and trains, comes days after Portugal, the Netherlands and parts of Spain renewed the restrictions. Read more

Even in England, which is moving forward with the July 19 removal of remaining COVID-19 restrictions, Prime Minister Boris Johnson has changed his message to urge caution. Read more

Johnson government – which says one of the world’s fastest vaccination drives has largely severed the link between infections and serious illness – deems it safer to reopen now rather than during flu season winter.

Politicians across the continent are refusing for now to accept a return to outright lockdowns which they fear could thwart the strong rebound in activity in the last quarter. But the caveats are mounting.

France’s finance minister said on Tuesday he now expected economic growth of around 6% for 2021, down from a previous target of 5%, but warned that could be revised down if the variant highly infectious disease from the Delta was taking hold.

“The Delta variant would be the only obstacle,” Bruno Le Maire told franceinfo radio.

That rang with a Reuters survey in which nearly 90% of economists polled said new variants of COVID-19 were the greatest risk to the eurozone economy, which they currently expect to face. healthy growth of 4.5% this year. Read more

A Reuters coronavirus tracker shows infections, although in most cases well below their peaks, are increasing in almost all European countries. https://graphics.reuters.com/world-coronavirus-tracker-and-maps/

Data collected by Oxford Economics shows that Delta now accounted for the majority of cases in Britain, Portugal and Austria, and over 40% of cases in Germany, Spain and Denmark.

He said the economic impact was difficult to predict, but countries with higher vaccination rates could be reassured by the moderate increase in hospitalization and death rates in Britain and Israel.

“Nonetheless, if economies reopen and allow cases to rise, economic gains could prove to be illusory if Covid-related absences trigger major disruption for businesses and higher cases lead to greater voluntary social distancing,” Oxford Economics said in a July 12 research note.

RISKY EXPERIENCE

This could already be happening in Portugal, where restaurant owners in Lisbon, who already struggle to survive without the usual influx of summer tourists, must now demand tests or a vaccination certificate for meals inside. Read more

The Dutch government cited Delta’s impact as it reimposed restrictions on nightclubs, festivals and restaurants on Friday. In Spain, the region of Catalonia has reduced the opening hours of bars and neighboring towns of Valencia have been allowed to impose curfews.

A big question mark now hangs over political decisions in Germany, Europe’s largest economy.

German officials say existing measures against coronaviruses should be maintained until more of the population has been vaccinated. They expressed their concerns about the decline of the discipline regarding social distancing and the wearing of masks. Read more

Economy Minister Peter Altmaier told a local newspaper that a new lockdown would be “absolutely the worst thing and to be avoided at all costs”.

Officials across Europe are taking a close look at what’s going on in England, with many seeing Johnson’s plan to reopen as a risky experiment.

There the picture is rather complicated by a decision to leave in place for the time being the obligation for workers to self-isolate when notified by an official app – a move that has already resulted in severe shortages of workers. workforce in the hotel industry and other sectors.

In a memo titled “A ‘V’ Shaped Recovery It Isn’t,” Bank of America cited this and other issues to conclude that sticking to its 3-quarter organic growth target of 3 , 0% now seemed “difficult”. .

“This should be a warning to policymakers that in a world where policy tools are limited and uncertainty high, the risks of overconfidence in the recovery outweigh the risks of the economy overheating,” he said. he declared.

Additional reporting by Maria Sheahan in Berlin; written by Mark John in London, edited by Emelia Sithole-Matarise

Our Standards: Thomson Reuters Trust Principles.


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