As Coronavirus Cases Rise in Europe, an Economic Toll Returns

As Coronavirus Cases Rise in Europe, an Economic Toll Returns
Restaurants in Austria will allow only carryout service./Courtesy of Facebook

The fourth wave of coronavirus infections is sweeping Europe, threatening to derail the continent’s already fragile economic recovery as governments impose increasingly stringent health restrictions that could reduce foot traffic in shopping malls, discourage travel, and thin crowds in restaurants, bars, and ski resorts.

Austria has taken the most severe steps, requiring vaccines and instituting a national lockdown that started on Monday. Other safety measures, including vaccine passports in France and Switzerland and a mandate to work from home four days a week in Belgium, will stifle economic activity.

“We are anticipating a difficult winter season,” said Stefan Kooths, research director of Germany’s Kiel Institute for the World Economy. “The pandemic now appears to be having a more detrimental impact on the economy than we had anticipated.”

 

The harsh lockdowns that swept Europe in the early months of the pandemic last year resulted in an almost 15% drop in economic production. Most of those countries could scrabble back and recoup their losses after introducing vaccines, and infection rates fell. Restrictions were removed, thanks to a slew of government help for businesses and the unemployed.

 

The Christmas market in Frankfurt, Germany, on Monday. Some German states have imposed partial lockdowns. Credit…Kai Pfaffenbach/Reuters

 

Economists optimistically predicted that Europe had reached a tipping point in September. Instead, in recent weeks, the greatest challenges to the economy appeared to originate from a post-lockdown euphoria that was producing supply-chain bottlenecks, energy price hikes, and inflation concerns. Nevertheless, the pandemic’s bite was expected to be mitigated by universal immunizations, allowing people to shop freely, dine out, and travel.

 

What was unexpected was a slew of new government regulations. The coronavirus has made a resurgence in some areas, thanks to a highly contagious variant that has been boosted by partial vaccine resistance and growing support for other anti-infection measures such as masks.

 

Mr. Kooths stated, “The lower immunization rates are, the bleaker the economic picture for this winter term.”

 

Vaccination rates vary greatly from country to country, but roughly two-thirds of Europe’s population has been vaccinated. According to the European Center for Disease Prevention and Control, hardly a quarter of the population in Bulgaria has had a vaccination, compared to 81 percent in Portugal.

Restaurants in Austria will allow only carryout service.

Stores in Austria were already losing 25% of their sales in November compared to the same month last year, according to the country’s retail trade association, which was announced on Monday. Although the last shopping Saturday before the lockdown — Austrian stores are closed on Sunday — was better than two years ago, the organization said it would not be enough to compensate for the predicted losses in the coming weeks.

 

According to Austria’s hotel association, H.V hotels fared no better in the week leading up to the lockdown, with one out of every two bookings canceled.

 

Nonetheless, the overall picture is not as bleak as it was last year. Despite the fact that numerous analysts’ projections for October, November, and December have been lowered, growth is still predicted to be healthy, with the annual gain hanging around 5%. In addition, the unemployment rate has decreased, and firms in some locations are reporting labor shortages.

 

Austria’s answer, a three-week lockdown that closes all stores save those that provide essentials, permits restaurants to only offer carryout, and forces people to stay at home except for vital activities, is not necessarily a forerunner of what other European governments would do. Last week, French and British leaders indicated that no fresh shutdowns were planned.

 

“We’re not there yet,” British Health Secretary Sajid Javid remarked on Sunday. But, while complacency is not an option, he expressed optimism that people may “look forward to Christmas together.”

 

While it was clear that restrictions and lockdowns had a significant and immediate impact on the economy, Claus Vistesen, chief eurozone economist at Pantheon Economics, said that limited and intermittent closures — such as those that already exist in some countries — were less likely to put a significant dent in overall growth.

 

Rising infection rates will also drive inflation concerns “a little bit into the background,” he said, at least for the time being.

 

The repercussions of extensive limitations on the unvaccinated or vaccination mandates, on the other hand, are far more difficult to measure.

 

Even the current boundaries, though, might be disastrous for individual enterprises and communities.

 

In Austria and Germany, the weeks running up to Christmas Day are among the busiest shopping days, with people flocking to outdoor markets to eat, drink, and shop for gifts. Traditional holiday markets in the region, typically from late November to December 24, are also popular tourist attractions that produce additional revenue through hotel bookings and other cultural activities.

 

Many marketplaces were entirely shut down last year, so vendors and buyers were anticipating a better year this year.

 

The Maria Theresien Platz market in Vienna opened on Wednesday, with wooden stalls adorned with evergreen boughs and fairy lights. However, after only four days, the sellers were obliged to close their doors.

 

Maria Kissova stood in front of a stack of tablecloths, pillow covers, and lace ornaments she had brought in from Slovakia, where she employs several people to create the crafts. Her journey to Vienna this year was her first, and it took months of planning and paperwork. Unfortunately, if the market is permitted to reopen as scheduled in mid-December, she will only be able to conduct a few days’ worths of shopping due to the lockout.

 

“It was a shock” when the lockdown was announced, she said, adding that it was too soon to estimate the extent of her losses. “All we have to do now is accept it.”

 

The scenario was the same for Daniel Zieman, who managed a gift shop across the square from Vienna’s Natural History and Art History Museums. He was concerned about the workers at his restaurant on the outskirts of town, which serves traditional Austrian cooking and relies heavily on tips from waiting tables during the generally busy season. Unfortunately, the government subsidies that will keep people afloat will not include lost tips.

 

“Many of our employees have children, and you can count on a certain percentage of tips every month,” he explained. “That isn’t going to be there.”

 

He said that many restaurants do their best business over the holiday season, with employers hosting end-of-year gatherings. “That’s an extremely fantastic business, with 30 to 40 people eating and drinking and eating and drinking and eating and eating and eating and eating and eating and eating and eating and eating and eating and eating and eating and eating and eating and eating and eating and eating and eating and eating and “It’s a pity,” he expressed his disappointment.

 

The Czech Republic and Slovakia have also imposed new limits. In Germany, some states have implemented partial lockdowns, and unvaccinated workers will be required to submit a negative Covid test before going to work beginning Wednesday.

 

By the end of this winter, almost everyone in Germany will have been “vaccinated, treated, or dead,” according to Jens Spahn, Germany’s health minister.

 

Although a statewide shutdown in Germany, the continent’s largest economy, is improbable at this time, Carl B. Weinberg, chief economist at High-Frequency Economics, cautioned that such a shutdown would bring the rest of Europe down with it. “If Germany shuts down, Europe would revert to recession,” he predicted.

 

President Emmanuel Macron of France, Europe’s second-largest economy, is wary of reversing economic advances ahead of a critical election in April. So despite health experts’ concerns that a new wave of coronavirus is approaching France “with breakneck speed,” Mr. Macron indicated last week that he would neither shut down sectors of the economy nor follow Austria’s lead.

 

Nearly 70% of the French population has received two vaccinations, and the government implemented a health pass earlier this year that required people to show proof of immunization to travel by rail or plane and enter restaurants, cinemas, and large shopping malls.

 

For persons 65 and older, the government will require a booster dose for the pass to remain valid. France’s Health Defense Council will meet with Mr. Macron on Wednesday to explore alternative methods for slowing the spread of the coronavirus.

 

According to a spokeswoman, the administration puts “the weight of restrictions on nonvaccinated persons rather than vaccinated people,.”

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