October 8, 2020

Europe

EUROPE: Managing the pandemic – what we are watching

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( 6 mins)

This updated weekly piece provides snapshots of how selected European governments are dealing with the ongoing Covid-19 pandemic. Please do not hesitate to contact us if you want to discuss any of the countries mentioned in more detail.

EUROPE: Managing the pandemic – what we are watching 1

The daily number of infections and positivity rates continue to increase across Europe, although with different intensities. The trend is particularly worrying in countries such as Spain, France, the Czech Republic, and most recently in the Netherlands and the UK. Against this background, restrictions on social gatherings and nightlife curfews are returning or being extended in most countries. These are still mostly implemented at the regional/local level, such as in Germany’s Berlin (bars will close at 11pm from Saturday) or the Brussels Capital Region (bars and cafes will be closed for at least a month).

Spain

  • Daily cases are still hovering above 11,000, with the Madrid region accounting for around 40% of new infections. The new restrictions imposed in the capital city and other municipalities are expected to remain in place for at least 15 days; other regions might be forced to impose similar measures if they cannot contain the virus.

  • Prime Minister Pedro Sanchez presented on 7 October the contours of the country’s Recovery and Resilience plan, which will invest EUR 72bn during 2021-2023 (EU funds will cover 80% of the money). He said that the ruling PSOE-Podemos government counted on investing EUR 27bn in 2021 but that this would only be possible if opposition parties approved the upcoming draft budget for next year.

  • A legal investigation affecting vice prime minister Pablo Iglesias is unlikely to lead to the ruling coalition’s demise despite calls by the center-right opposition for the resignation of Podemos’ leader.

France

  • The seven-day rolling average of new infections remains around 12,000. Following the imposition of new restrictions in Paris and several departments, other cities such as Lille, Lyon, Grenoble, or Saint-Etienne might also be forced to introduce new restrictive measures in the coming hours.

  • Several MPs are pushing for the inclusion of amendments to next year’s budget to force companies to adopt certain labor and management commitments in exchange for the proposed business tax cuts. However, MPs from the parties supporting the government are unlikely to support that course of action.

  • A recent opinion poll by ELABE showed that the French are split on whether new measures should be implemented to control the virus. However, more than 80% of respondents said they would comply with any new restrictions imposed by the government.

Italy

  • The government on 7 October made it mandatory to wear face masks outdoors nationwide to reduce rising Covid-19 infections. The cabinet also approved a decree to extend the Covid-19 state of emergency to 31 January.

  • The decree was passed on the same day that Italy registered 3678 new cases – the highest daily figure since 16 April. While the situation had previously been more serious in northern Italy, numbers are now rising across the country. The region with the highest number of new cases on 7 October was Campania in the south, with 544, followed by Lombardy with 520, data from health authorities showed.

  • According to the budget blueprint approved earlier this week, the shortfall between government revenues and spending will come in at 10.8% of GDP in 2020, falling to 7.0% next year. Rome sees the economy contracting by 9% this year and expand by 6% in 2021. The budget must be approved by parliament by 31 December.

Germany

  • Although the daily number of new infections continues to hover around 2,500 cases, the government is increasingly concerned that local health authorities’ relatively good ability to trace individual infections might come under pressure; the Berlin city government’s limited performance has attracted special attention.

  • Ahead of the autumn holidays, northern and southern regional states popular with domestic tourists will require a negative coronavirus test that is no older than 48 hours; otherwise, tourists will not be allowed to stay.

  • Chancellor Angela Merkel appeared only via video message at the annual meeting of the German industry association; participants expressed concern about the double pressure of the pandemic and tightened climate targets, calling for greater state support for the greening of Germany’s economy.

United Kingdom

  • The daily number of new infections has been above 10,000 over recent days, briefly even crossing the 20,000 mark, in a sign that the pandemic situation is worsening further; Scotland went ahead with further restrictive measures.

  • Hospital admissions due to coronavirus jumped by 25% in one day in England, prompting fears that after weeks of growing new infections, the virus is also returning to older and more vulnerable parts of the population.

  • PM Boris Johnson has outlined an ambitious agenda for economic change in the UK past the pandemic, but the more immediate reality is that his new Conservative party remains split between prioritizing the economy and addressing the failure of local lockdowns with nationwide measures; recent Tory rebellions suggest that this will be a major challenge in the weeks to come.

Czech Republic

  • The country has the highest rolling seven-day average of new Covid-19 cases per 1mn people in Europe. Health Minister Roman Prymula (Action of Dissatisfied Citizens, ANO) will announce new restrictions on “leisure activities” on Friday, 9 October. However, no nationwide or local lockdowns are expected as hospitals maintain considerable extra capacity.

  • There is a lack of political agreement over what to do if the epidemiological situation deteriorates. Prymula considers a nationwide 14-day lockdown as a measure of last resort, while Prime Minister Andrej Babis (ANO) completely rules out such an option because of economic concerns. Conversely, President Milos Zeman advocates for much stricter measures, even in the current situation.

  • Parliament is considering a new tax package for 2021, which is expected to lower personal income tax for employees.

Romania

  • The number of infections is surging to new highs of around 3,000 per day, with the highest incidence rate in the past 14 days (around 2.0) recorded in the capital Bucharest. As a result, the capital and some smaller cities are closing indoor restaurants, bars, nightclubs, and gambling parlors.

  • The opposition Social Democratic Party (PSD) has called for the postponement of the 6 December parliamentary election if the epidemiological situation continues to deteriorate. However, this is unlikely as parliament would need to pass two bills on the matter, the enactment of which could be delayed beyond the current election date by President Klaus Iohannis.

  • The government will shortly launch a new EUR 1bn support scheme for small businesses and the self-employed, offering grants for investment and working capital. The scheme will be co-funded by the EU’s cohesion fund.