Worsening pandemic delays economic recovery in Europe

This bad news already raises the question of strengthening the recovery plan of 750 billion euros voted last year by the European Union.

The EU "provided an adequate response" following the first wave of the epidemic in spring 2020. But, following the second and third waves (...), we will no doubt have to complete this response " , launched Thursday evening in Brussels French President Emmanuel Macron, opening the debate.

At the beginning of March, it still seemed certain that the recovery would be there this summer, once the vaccination campaign, after a few failures at the start, was frankly on track.

At its meeting on March 11, the European Central Bank kept its forecasts "broadly unchanged", its president Christine Lagarde saying she was counting on "a firm rebound in activity in the second half of the year".

But the picture has since suddenly darkened. The third wave of the Covid-19 epidemic led the three main economies in the euro area - Germany, France and Italy - to adopt a new regime of restrictions, while it seemed to be heading instead towards a relaxation of measures . And the vaccine supply difficulties, which dominated the European Union summit on Thursday, are still far from being resolved.

In February, credit insurer Euler Hermès estimated that the EU was five weeks behind its goal of vaccinating 70% of the population by the end of the summer. Thursday, he redid his calculations: the delay is now seven weeks and could cost 123 billion euros in 2021 to the Twenty-Seven.

"If we compare with the situation in the United States, where the outlook is much more positive, we are clearly falling far behind the recovery with this third wave," notes Charlotte de Montpellier, economist at ING.

Emmanuel Macron himself compared the recovery policies of Brussels and Washington. "The strength of the American response and the plan announced a few days ago by President Biden and his Congress place us before a historic responsibility," he said, referring to the decision to inject 1.900 trillion dollars. dollars in the US economy.

Two-speed Europe

The ING bank is now anticipating around 3% growth for the euro zone in 2021, more than half a point less compared to the beginning of March. She believes that "most of the recovery" will take place from the third quarter, a little later than expected.

It is also the diagnosis of Andrew Kenningham, chief economist for Europe of Capital Economics, according to which Europe will not find its level of GDP of before the crisis before the second half of 2022, one year after the States -United.

At the current rate, the share of the vaccinated population in the EU is not expected to reach 50% "before July", a threshold that Britain has already crossed and that the United States is expected to exceed "in the coming weeks. ".

"The outlook has deteriorated", the delay in vaccination, which defers the lifting of restrictions, may lead to a "two-tier economy", warns Chris Williamson, chief economist of IHS Markit.

The March PMI figures - which measures private sector activity - thus revealed a significant divergence between Germany, the euro zone's largest economy, which is benefiting from the industrial rebound, and France, which is more dependent on services.

The morale of German entrepreneurs has just returned to its level of June 2019, according to data published on Friday by the Ifo institute.

The countries of the south - Spain, Portugal, Italy, Greece - are worried about having to endure a new mixed tourist season, which threatens European cohesion.

Standard and Poor's has however chosen to keep its forecasts unchanged for the euro zone, at + 4,2% for 2021, stressing "the maintenance of favorable financing conditions currently prevailing". In addition, "the economy of the euro zone is less sensitive to social restrictions than a year ago," said Sylvain Broyer, chief economist Europe for S&P.