Europe’s economic outlook clouded by the Delta variant

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Across Europe, governments and businesses are maneuvering to try to prevent an increase in coronavirus cases – driven by the rapid spread of the Delta variant – from hampering the continent’s recovery.

In recent months, the easing of pandemic restrictions and the increasing number of vaccinated have propelled the economy forward. The European Commission recently improved its forecast for the region. Britain has recorded four consecutive months of economic growth and in some regions of the country, the number of employees on the payroll is higher than before the pandemic.

But now the Delta variant has made the path to recovery much more unpredictable and uneven.

In Britain, the final lifting of restrictions on Monday should give new impetus to the economic recovery. But the surge in infections presents an unexpected new hurdle for businesses trying to operate at full capacity. Businesses including hotels, theaters, and trucking are forced to shut down temporarily as staff are isolating themselves because they have caught the virus or have been told they have come into contact with someone who did.

The increase in the number of people who self-isolate has been a ball of the curve even for businesses that have thrived in the past 16 months. The Fowlds Cafe, located on a residential street in south-east London, was only due to close for five days during the first lockdown, while the owner quickly turned it into a cafe and general store with no seats. Business has been strong.

But after carefully navigating pandemic restrictions for over a year, Fowlds recently had to shut down for three days because a staff member was in contact with someone who had the virus – so the rest of the team. also had to self-isolate and wait for coronavirus test results. These closures are more and more frequent.

“I think it’s going to be very disruptive,” said Jack Wilkinson, owner of Fowlds. He’s trying to mitigate the impact by looking for more part-time staff to reduce the chances that the whole team will need to self-isolate at the same time. But he said he was unlikely to reintroduce seats in the cafe until next spring, to keep staff and customers safe.

In other European countries, the growing number of cases has collided with the return to normal life and restrictions have been reimposed. In Spain, which once again has one of the highest infection rates in Europe, some regional governments have reintroduced restrictions. The virus is spreading mainly among the younger, unvaccinated population, raising fears of a further decline in international travel and canceled reservations.

Portugal has reintroduced a curfew in Lisbon, Porto and other popular tourist spots, cushioning a second summer travel season. When the European Commission released its latest economic forecast last week, Portugal was one of only two countries for which growth forecasts had not been revised upwards as coronavirus restrictions in June slowed there. the pace of recovery.

“Spain and the other Mediterranean countries really have a big problem,” said Guntram Wolff, director of Bruegel, a Brussels-based economic think tank. “This health situation massively affects a critical sector,” he said.

This week, France and the Netherlands also announced new measures. In France, the government is trying to avoid another shutdown by introducing a “health pass”, indicating whether users are vaccinated or recently tested negative, to enter restaurants and on planes and trains. The country has pursued an “whatever it takes” policy to support workers on paid leave and to help companies avoid bankruptcy. Of the nearly 300,000 jobs destroyed last year, around 187,000 new ones were created.

The German economy has rebounded quickly. Masks are still mandatory inside stores, but restaurants are open and full. The unemployment rate, at 5.9%, has almost returned to pre-crisis levels.

But Germany’s recovery has also been bumpy and the number of new cases doubled last week and three-quarters of those were attributed to the variant.

There is no question of a renewed lockdown so far, but quarantine rules for travelers returning from Portugal and some other countries will discourage tourism. This is bad news for the rest of Europe: Germans are among the continent’s most avid travelers.


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