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Original title: France and Germany return to the blockade, Europe prepares for more economic losses Source: Global Forex Network
France and Germany announced new lockdown measures on Wednesday, showing that under pressure from rising numbers of new crown cases and deaths, Europe’s original strategy against the epidemic has collapsed. In addition, other European governments are considering the possibility of adopting the same measures, and Europe will face greater economic problems.
French President Macron announced strict restrictions on his speech on national television. He said the national shutdown will begin on Friday and run for a minimum of one month, requiring people to stay home, while restaurants, bars and stores deemed non-essential will be closed.
German Chancellor Angela Merkel stated that the German federal and state governments agreed to close restaurants, bars, gyms, concert halls and theaters for a month starting on November 2. He said the hotel will not accept tourists until the end of November and that public gatherings will be limited to 10 people from two families.
The two leaders affirmed that factories and schools will continue to be opened to alleviate the economic impact of the restrictions. However, the new restrictions are clearly different from the specific measures that European officials have been hoping to contain for months. Macron called the new lockdown measures a shock therapy designed to slow the momentum of the epidemic.
Macron said: “If we do not take severe measures against the spread of the new epidemic, our hospitals will be saturated.”
The restrictive measures taken by the two largest European economies may put pressure on other countries to follow suit.
Macron said: “The second wave of the epidemic may be more violent and deadlier than the first wave.” He also said that the spread of the virus “even exceeds the most pessimistic prediction.”
In France, which has become the epicenter of the epidemic in Europe, the number of patients recently admitted to intensive care (ICU) increased by an average of 38% during the last week. The health department said that more than half of the beds in the ICU ward are now occupied by 2,918 COVID-19 patients. At the height of the COVID-19 crisis in April, more than 7,000 COVID-19 patients were treated in the intensive care ward.
The increase in the rate of positive test results also indicates that the development of the epidemic has exceeded the detection capacity of the authorities. On Tuesday, France posted a positive rate of more than 18%, down from 13.6% a week ago.
Although the restrictions in Germany are not as strict as those in France, they mark the beginning of a rare coordination between the states of the country, since previously there were frequent differences in the prevention strategies of the states.
Merkel warned Wednesday that single-day infection cases have doubled from last week, and the number of patients in intensive care in the past 10 days has also doubled. Germany’s leading epidemiological research institute, the Robert Koch Institut, reported Wednesday that there were a record 14,964 new infections in a single day.
The new restrictions mentioned above may compound the economic losses caused by the spring lockdown measures. French Budget Minister Olivier Dussopt said on Wednesday that the loss of economic output caused by the month-long lockdown could reach between 2 and 2.5 percentage points. France’s gross domestic product (GDP) fell 13.8% in the second quarter, a record contraction after World War II.
An analyst at High Frequency Economics Inc. said in a report Wednesday on the new lockdown: “Any lockdown will cause trauma.” “Businesses will go bankrupt, which will reduce job opportunities, and a lot of these jobs never will be. It came back.”
Tomasz Michalski, professor of economics at the Ecole Business School in Paris, said: “The impact is very terrible, especially for small and medium-sized companies, which have closed their doors before the biggest holiday of the year.”
“In these companies, most of the annual sales occur in the last quarter of each year. Their business will once again be taken away by supermarkets and large online retailers.”
Analysts at Berenberg said in a report Thursday: “It now appears that France’s GDP will fall sharply in the fourth quarter, falling from 3% to 4%.”
“The lockdown measures will cause Germany’s fourth-quarter GDP to fall by at least 0.5% from the previous quarter. Especially hotels and cultural institutions will suffer the most once again,” analysts at Deutsche Bank said. in a report Thursday.
Compared to its European counterparts, Germany has so far weathered the economic crisis relatively well. This is due in part to massive fiscal stimulus, but also to the service sector outperforming the manufacturing sector.
However, even this is risky. Deutsche Bank said: “Rising infection rates in Europe and the United States may dampen demand for German exports.”
