Report Contents

June 17, 2021

Europe

EUROPE: Managing the pandemic – what we are watching

BY Andrius Tursa, Antonio Barroso, Carsten Nickel, Luis Cornago

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( 7 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.

Graph of the week

EUROPE: Managing the pandemic – what we are watching 1

France

– With daily cases below 4,000, the government has decided to bring forward the end of the nighttime curfew to 20 June and remove the obligation to wear a face mask outdoors. Recently released data shows the Delta variant only makes up between two and four percent of all new cases.

– Average daily vaccinations remain above 500,000, and around half the population has received at least one dose. However, the government is worried about the uptake of the jab by younger cohorts, as the number of vaccination appointments has started to decrease in certain parts of the country.

– The ruling Republic on the Move (LREM) party is likely to perform poorly in the 20 and 27 June regional and departmental polls, and Marine Le Pen’s National Rally (RN) might be able to win its first region. However, the vote should not be seen as a bellwether of next year’s presidential election.

Spain

– Daily cases continue to hover around 5,000, but some regions have seen a slight uptick in infections in recent days. The central government and the regions have been negotiating a protocol to lift the obligation to wear a face mask outdoors that will probably be approved in the coming days.

– Around 45% of the population has received at least one dose of the jab, and some regions have already started to vaccinate the 30-40 cohort. Under the current pace, the country is expected to reach the target of vaccinating 70% of the population by the end of August.

– Prime Minister Pedro Sanchez is expected to take a decision on pardoning the jailed secessionist politicians in the next two weeks. While the move could have negative consequences for Sanchez’s long-term electoral standing, it is unlikely to make a significant difference for the short-term political outlook.

Italy

– As of 14 June, most of Italy is in a “white zone,” the area with the least coronavirus restrictions. About 69% of the Italian population (40 million people) enjoy almost complete freedom from Covid-19 curbs. Almost all of Italy is likely to become a white zone starting from next week.

– The imminent end (30 June) of Italy’s coronavirus freeze on layoffs could cause tensions within the governing coalition. The ruling parties are divided over the matter, with the Five Star Movement echoing trade unions calling for a further extension and the Lega pushing for a return to normal. As a compromise, the ban could be extended only for certain hard-hit sectors and/or for a short time.

– The extension of Italy’s Covid-19 “state of emergency,” which is currently set to end on 31 July, is also expected to become a matter of controversy within the coalition backing Prime Minister Mario Draghi’s government. While the Lega has already indicated it is not in favor of further prolonging it, Draghi is apparently considering an extension to year-end.

Germany

– The decline of the pandemic continues, as the seven-day average of new infections has now fallen below 2,000 cases, despite the continued phasing-out of restrictions on the local level.

– The prospect of reduced deliveries of the BioNTech/Pfizer vaccine in July has triggered renewed fears of delays to the vaccination campaign, following news about likely Johnson & Johnson delays.

– The legal requirement for businesses to enable employees to work from home is expected to expire at the end of June; likewise, the federal “emergency brake” law will not be extended beyond that date.

United Kingdom

– The UK seems to be entering a fourth wave of the pandemic, as the seven-day average of new infections has risen to more than 7,500 cases, back to where it last was in early March.

– The government has delayed the final stage of its reopening agenda by four weeks, from 21 June to 19 July. Still, it might be challenging to significantly speed up the vaccination campaign even further in the meantime.

– The government has extended the ban on evictions until March 2022; however, if cases continue to rise, the conversation about extending more direct forms of fiscal support is likely to regain momentum.

Greece

– A contentious labor reform bill that has sparked nationwide protests and strikes was carried through parliament on 16 June by the center-right government’s majority, with 158 votes in the 300-seat House. While the bill’s ratification constitutes an important victory for Prime Minister Kyriakos Mitsotakis, it could mark the beginning of closer cooperation between opposition parties.

– EC President Ursula von der Leyen will be in Athens on 17 June to announce that Greece’s national recovery plan, known as Greece 2.0, has been signed off by Brussels. Athens hopes to secure around EUR 7.8bn from the EU recovery facility this year.

– In a 14 June meeting, Prime Minister Mitsotakis and Turkish President Tayyip Erdogan came to a joint understanding that 2020 tensions should not be repeated in 2021 while noting that big differences between the two NATO members remain on multiple fronts. A calm summer in the Aegean and the Eastern Mediterranean is now expected.

Poland

The seven-day rolling average of new cases dropped below 300, while deaths are fluctuating around 50. A positive and rapidly improving epidemiological picture is somewhat clouded by the presence of the Delta variant of the virus in the country.

– A further easing of restrictions is scheduled for 26 June. The government will raise the limit of people allowed to participate in various events and increase the occupancy allowance in commercial and public facilities.

– Deliveries of the Pfizer/BioNTech vaccine to Poland are expected to drop by around one-half in July, as the government could not conclude an agreement for additional shipments. Authorities warn that lower supplies could limit vaccine availability, particularly as most of the new deliveries will be reserved for revaccination.

Hungary

– The seven-day average of new cases dropped to around 100, while deaths are in single digits. These are the best epidemiological figures since summer 2020. The government announced that the third wave of the pandemic is over, with the political focus now shifting toward economic recovery and the 2022 parliamentary elections.

– Around 55% of the population has received at least one vaccine dose, but the number of first doses has dropped to just around 66,000 per week – down from the peak of 500,000+ in April. The government is starting immunization of the 12-15-year-old group, which could slightly increase the pace of vaccination in the coming weeks.

– The government intends to launch a national consultation survey on economic recovery, which will include proposals such as raising the minimum monthly wage to HUF 200,000 (EUR 570), providing families with personal income tax rebates for 2021, or providing tax cuts for small and medium enterprises.

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