Europe restarts its economy in a dilemma after a long and costly shutdown

Release time:2020-09-18 06:56:20 view:206

Recently, many European countries have taken measures to lift the embargo step by step and restore economic production and social life. However, in the face of the rebound of the epidemic in some countries, experts have warned to prevent a second outbreak. On the one hand, there is the pressure of epidemic prevention and control; on the other hand, there is the risk of economic recession. Europe is trying to find a balance between epidemic prevention and economic recovery.


Lifting the ban gradually will boost the economy


Since the beginning of may, many European countries began to cautiously and gradually lift the restrictive measures.


On May 13, the UK entered the first phase of lifting the ban: "actively encourage" people who cannot work from home to return to work, and food processing, construction and other industries to resume work; Outdoor exercise was changed from once a day to an unlimited number of times. As early as June 1, it will enter the second stage: shops will gradually resume business and primary schools will resume classes in stages. Then, as early as July 4, it will enter a third phase: industries such as hotels and restaurants can resume work.


The French ban was lifted on May 11th. French prime minister philippe said the gradual lifting of the ban would take at least a few weeks. In the first phase, shops and schools reopened. The French ministry of economy and finance estimated that 400,000 businesses and shops returned to work on Monday.


Italy, the first country in Europe to experience the outbreak, began to phase out its quarantine on May 4. About 4.5 million people, mostly in manufacturing, returned to work in Italy on May 4, business insider reported.


Germany's chancellor, Angela merkel, reached an agreement with the governors of 16 federal states on May 6th to gradually lift the ban from that day. All the federal governments agreed that once the rate of infection in any county or city rose to 50 new cases per 100, 000 people, restrictions would be reimposed.


At the same time, European countries have introduced new measures to deal with the economic impact of the epidemic.


The European commission on May 13th issued guidelines for a gradual resumption of summer travel, in a bid to save tourism. Italy's stimulus package includes subsidies and tax breaks for small and medium-sized businesses; 25.6 billion euros in subsidies to employees and self-employed workers whose incomes are affected by the outbreak; To provide families with various subsidies, such as child-care funds; Increasing spending on health care; To implement stimulus measures for the hard-hit tourism sector. French finance minister jean-michel le maire announced plans to exempt small and medium-sized enterprises in the wine industry from social security contributions and set up a 140 million euro support scheme. The Austrian government and the federal chamber of commerce have agreed on a 500 million euro plan to support the restaurant industry by cutting taxes and boosting consumption. The Cypriot government has approved a 6 billion euro stimulus package aimed at reviving the economy, equivalent to nearly a third of the country's gross domestic product before the outbreak.


The long shutdown has been costly


"At the moment, the situation is stabilizing in various countries, and many people in Europe believe that once we get past the peak of the epidemic, we can begin to gradually lift the restrictions. In Germany, for example, medical experts and government officials agree that the annual death toll from flu is around 25,000, and that there is no social lockdown or compulsory vaccination. This is understood as a potential cost to the pursuit of personal freedom and economic well-being." "Considering the political system and the electoral system, European governments can't keep people at home for long," said wang hongyu, a researcher at the national academy of opening to the outside world at the university of international business and economics in Beijing. "In addition, Germany and other countries have strong medical systems, and the epidemic control effect is relatively ideal. We have the confidence to gradually lift the ban."


According to the time line of covid-19 development released by the European center for disease control and prevention, the covid-19 outbreak in Europe accelerated sharply after the outbreak in late February, reached its peak in early April, and then slowly declined in the ups and downs. In its latest assessment, released on 23 April, the European centre for disease control and prevention (ecdc) downgraded the risk of a severe covid-19 outbreak in European countries from "high" to "low", but only if appropriate social distancing continues to be ensured.


The epidemic has severely impacted the European economy, and the huge pressure of recession is undoubtedly the driving force for the lifting of the ban. On May 14, the European central bank (ECB), headquartered in Frankfurt, Germany, released its latest economic report, saying that in the first quarter of this year, due to the covid-19 epidemic, the gross domestic product (GDP) of the euro area fell by 3.8% month-on-month, the biggest drop since 1995. Judging by the sharp drop in economic activity in April, the impact on the eurozone economy in the second quarter will only become more pronounced. In the first quarter of this year, UK GDP fell by 2.0% compared with the fourth quarter of 2019, according to official data released on Thursday. It was the biggest quarterly decline since the global financial crisis at the end of 2008. According to the bank of England, the outbreak will cause the UK to face its worst recession since 1708, with economic output contracting by nearly 30 per cent in the first half of the year and shrinking by 14 per cent for the year as a whole.


"A prolonged social shutdown will have a huge negative impact on the economy and people's livelihood." "German experts estimate that the social shutdown is costing the German economy up to 50 billion euros per week," wang said. Britain recently decided to extend its aid programme to the end of October in order to help businesses affected by the outbreak. Southern Europe's dependence on tourism has made it all the more urgent to restart their economies. At the end of the day, it is important to try to restore reasonable tax revenue as soon as possible to promote fiscal sustainability when the state's finances are unsustainable, "he said.


Guard against any rebound and proceed cautiously

Analysts say Europe's current measures to lift the embargo are still a drop in the ocean to drive economic recovery. Despite the fact that the epidemic has not been completely eradicated, economic development still faces uncertainties in many aspects.


"Under the principle of social distancing, all European countries are facing a decline in the number of people they serve in the service sector, on which their economies are highly dependent. At present, although European countries are gradually reopening their borders, it is only for internal countries of the eu, and there is little possibility for citizens from outside countries to enter. A real economic restart is still a long way off." Wang hongyu also has concerns about the UK's economic restart plan. "the UK's economic restart plan aims to be 'big' and 'whole', covering almost all industries affected by the epidemic. The goal is to spare no effort to ensure the smooth operation of the economic system. However, I don't think the restart plan will have much effect. Britain's prime minister, Boris Johnson, faced stiff opposition resistance when he proposed the restart plan in parliament. The UK is still in its infancy and has some way to go before it can be implemented."


And even if the ban were lifted, it would be hard for the hard-hit supply chain and job market to recover any time soon. A survey of 1,300 French entrepreneurs by the Xerfi institute for economic research found they were generally pessimistic about the economic recovery because of weak demand, a shortage of workers and future cash flows. One in five predicted the French economy would not recover until September.


The biggest uncertainty is the outbreak. Countries should not blindly lift lockdowns without following up on person-to-person contact, who executive director of the who health emergencies programme Paul laing said on May 11. Andrea amon, head of the European centre for disease control and prevention, also said the immediate danger was from the current measures to lift the blockade. 'the probability of people gathering is higher,' she said. 'if there is not enough testing for the virus, no tracking of confirmed cases, social distancing and hand washing, then the next wave should not be far off.'


In fact, the epidemic is beginning to rebound in Europe. Clusters of infections have been reported in many parts of France since may. In addition, the Robert Koch institute said Tuesday that the basic number of covid-19 infections in Germany had risen to 1.13 over the weekend, meaning the epidemic is above the "red line", the German daily mirror reported. German chancellor Angela merkel said on the same day that the outbreak in Germany was in a "new phase" and again warned people to observe a "social ban" and wear masks when going out.


As the fight against the epidemic enters a new phase, European countries are cautiously seeking a balance between containing the outbreak and resuming work and production. "We are entering a new world," said jean-pierre le maire, France's finance minister. "In this world, we must learn to combine economic activity, work and prevention and control." British prime minister Boris Johnson said the challenge was to find a way forward that would preserve hard-won gains and ease the burden of the lockdown. "it's a very difficult balancing act," he said.

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