LONDON – Remaining dire hopes that Europe was recovering from the economic disaster wrought by the pandemic have faded, as the deadly virus quickly resumed spreading across much of the continent.
After a sharp expansion in the first part of summer, British economy It grew much less than expected in August – just 2.1 percent compared to July, the government reported Friday, adding to fears that more weakness is coming.
Earlier in the week, France, the second largest economy in Europe, It lowered its forecast for the pace of expansion For the last three months of the year from a minimum of 1 percent already to zero. Overall, the National Statistics Agency expects the economy to contract 9 percent this year.
The dwindling outlook is a direct result of concern about the virus returning. France has reported nearly 19,000 new cases Wednesday – a single-day record, and almost double the day before. The troop increase prompted President Emmanuel Macron to announce new restrictions, including a two-month closure of cafes and bars in Paris and surrounding areas.
In Spain, Governor of the Central Bank This week he warned that the rapid spread of the virus could force the government to impose restrictions that would lead to an economic contraction of up to 12.6 percent this year.
Chief Economist at the European Central Bank He warned on Tuesday that the 19 countries that share the euro may not recover from the disaster until 2022, with countries that depend on tourism particularly at risk.
Summer increasingly looks like a long time ago.
In July, as infection rates decreased, the lockdown was lifted and many Europeans indulged in the sacred rituals of the summer vacation. Signs of rebirth They looked abundant. Many European economies have expanded strongly as people return to stores, restaurants, and vacation destinations. Even the most optimistic economists are starting to celebrate the so-called V-shaped recovery, which is marked by a rebound as intense as the decline that preceded it.
Hopes were also supported by a Historic agreement drawn up by the European Union To raise a 750 billion euros ($ 883 billion) relief fund by selling bonds backed collectively by all members. The move has bypassed years of resistance from debt-hating northern European countries, while indicating that the European bloc – generally not known to cooperate in the face of the crisis – has achieved a new state of solidarity.
But most economists assumed that the better days would only last as long as the virus could be contained. The restrictions imposed by governments appeared to be less important than consumers’ desire to interact with others and return to workplaces and shopping areas.
In a report this week, Oxford Economics, a London-based think tank, analyzed data across the Eurozone, noting that much of the improvement in late summer was a result of factories coming back to life after the shutdown. For the expansion to continue, people have to buy the products that the factories make. The desire to spend is affected by confidence – whether people feel safe enough to move around; Whether they fear losing their jobs.
By September, as new coronavirus cases rose again, consumption had decreased.
“With the health situation likely to improve in the near term, we expect the recovery to slow again over the next few weeks,” concluded the report by Moritz Degler, chief economist at Oxford Economics.
The economic slowdown is unfolding at a time when some European economies begin to cut back the extraordinary amounts they spent on Protect workers from unemploymentWhich raises concerns about what appears Unemployment inevitable.
In Britain, the government, led by Prime Minister Boris Johnson, has been aggressively subsidizing wages at companies hit by the pandemic as long as employers don’t fire their workers. The public covered 80 percent of the wages when the program began in the spring. Even after gradual easing, the government bears 60 percent of the cost this month.
But the furlough program, which cost the Treasury 39 billion pounds (about $ 50 billion), is set to end at the end of the month. The Comptroller of Public Finance, Rishi Sunak, was expressing concerns about the size of Britain’s debt as he pledged to balance the books. Under Slim Replacement Program Last month, it was announced that the government would cover only 22 percent of wages in the future.
But rapidly deteriorating economic prospects forced Mr. Sunak to return to the well. On Friday, in anticipation of tougher restrictions on business, A. New leave program It would cover two-thirds of wages at businesses to be shut down as virus cases rapidly increase, and that would also increase grants. These measures may be of particular importance in industrial areas in northern England, where increased electoral support for the Conservative Party in last year’s elections helped keep Mr Johnson in office.
Fears of dwindling wealth in Britain were amplified by the possibility that the nation could do so The crash of the European Union At the end of the year – completing the arduous process of Brexit – in the absence of a deal governing future trade. That would take the risk Clutter killing jobs, Especially in Ports.
On the other side of the English Channel, the decline led to the realization that complex hurdles remained ahead of the administration of the European Union’s relief fund, limiting expectations in the hardest hit countries such as Spain and Italy.
Spanish Prime Minister Pedro Sanchez announced Wednesday The stimulus spending plan Worth 72 billion euros ($ 85 billion), with four-fifths of the money planned from the European Fund.
Spain may have to wait for that money. The fund should start operating by January, afterwards You are almost certain to encounter delays As members of the European Union debate the terms of their distribution – especially those aimed at enforcing the law Hungary Poland must adhere to the democratic norms of the bloc.
The continent’s prospects for recovery are further constrained by rules that curb European Union members ’debt and curb spending. These restrictions have been suspended, but will eventually return, limiting growth prospects.
Italy I’m counting on receiving € 209 billion ($ 246 billion) from the European Relief Fund, but the government also pledged to reduce its public debt, which exceeded 134 percent of annual economic output at the end of last year. Such austerity, as the pandemic increases the costs of medical care, will almost certainly plunge Italy into a longer and deeper recession.