November 30, 2021

This Covid wave will not hit economy as hard

The brand new Covid-19 pandemic wave will not hit the EU economy the identical manner as it affected the bloc’s member states this time final 12 months, the EU Fee mentioned on Wednesday (24 November).

“Our estimate is that the economic consequences will not be as serious as they have been last winter,” financial commissioner Paolo Gentiloni informed reporters, when presenting the manager’s suggestions for EU international locations.

He mentioned it’s “not only because the economy is more adapted to infections, but because we have vaccines” – and a excessive fee of vaccination will assist keep away from a extra critical financial impression.

Gentiloni nonetheless did warn that the service economy, which is extra contact-intensive, will be the primary to be affected – however added that member state governments ought to resolve whether or not to maintain them open or shut them.

“Our only message is to take the situation very seriously but without thinking that the economic impact will be the same as one year ago,” he mentioned.

The EU’s public well being company, the European Centre for Illness Prevention and Management (ECDC), warned in a report on Wednesday of excessive dangers of a spike in deaths and hospitalisations in December and January, if measures had been not launched.

The World Well being Group meanshile mentioned Covid-19 instances jumped by 11 p.c in Europe within the final week, the one area on the planet the place the virus has continued to extend since mid-October.

A number of member states, together with Austria, Belgium, and the Netherlands, have already launched extra restrictive measures to curb the an infection fee.

Again to prudence

The fee mentioned Europe’s economy is bouncing again from the recession.

Nonetheless, it added, that there are a number of dangers such as excessive power costs, inflation (each of which the EU government estimates to melt subsequent 12 months) and supply-chain bottlenecks.

In its evaluation of nationwide budgets of member states, the fee warned that international locations with excessive debt ranges, such as Belgium, France, Greece, Italy, Portugal and Spain, would possibly carry present spending measures greater than their potential progress fee.

The fee additionally urged Italy to rein in authorities spending progress, as the nation’s debt-to-GDP ratio is greater than 150 p.c.

The EU government urged prime minister Mario Draghi’s authorities to comply with a “prudent” financial coverage.

“We have to ensure a debt reduction path that is not in contradiction with growth,” Gentiloni mentioned – including that Italy’s economy is in “good shape”.

The difficulty goes to the center of the looming debate throughout the EU on the rewriting of the bloc’s deficit guidelines within the wake of the monetary disaster and the pandemic.

The controversy may reignite a fierce disagreement between souther nand northern member states on debt sustainability and deficit.

The EU government is predicted to provide you with concrete proposals solely subsequent 12 months. The principles have been suspended within the wake of the pandemic in order that governments can stimulate their economies.

“What we are discussing is exactly how we can build a consensus among member states to have realistic and enforceable common rules,” Gentiloni mentioned.

He advised that even when the suspension of guidelines ends, ti will not be ‘business-as-usual’ anymore.

“It’s not that we finish with the general escape clause and we simply go back to where we were and with consequences that everyone can guess,” he mentioned.

Regardless of mounting dangers, the EU economy is projected to progress by 5 p.c this 12 months, and 4.3 p.c subsequent 12 months.

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