April 01, 2021 | 14:36
UK (1), EU (0)
Over the past four weeks, there has been a stark contrast between the EU and the U.S. This week, it was the EU and almost everywhere else, from Canada to China and (ouch!) the U.K., where it was revealed that real GDP in the former member of the bloc did not contract as much as expected in 2020. And, growth was actually 3/10ths stronger in Q4 than earlier calculations estimated. And, rubbing coarse salt in the wound was news on lockdowns/restrictions. In the U.K., spring is in the air. Schools reopened on March 8th, and as of March 29th, two households can mix things up outdoors, or up to six people (before, there was a max of two people). The government will decide on the next stage of loosening restrictions in mid-April and then again in May, with an end goal of June 21 to fully emerge from lockdown. PM Johnson pleaded for caution but called this a “small step to freedom”. And it is.
Meantime, France is going in the opposite direction. President Macron, facing a spike in hospitalizations, was forced to put the entire country back into lockdown (for the 3rd time), a move he has long resisted. A large portion of the country was already under strict rules (19 departments, including Paris), and now those rules will be extended nationwide as of this weekend for at least a month. On April 3rd, all of France will be subject to a nightly curfew (7 pm to 6 am), all non-essential stores will close, and travel will be limited to 10 km from home. If you need to travel farther, then you had better have an attestation. All schools are going online starting April 5th, with students returning in a phased-in process, starting at the primary level in late April. The opposition (think Le Pen) is going to have a field day with this. The presidential elections are just one year away.
It’s not just France. Germany has its own problems, with plenty of political infighting over its lockdown (which runs until April 18th) and the slow rate of immunizations relative to other smaller countries. And let’s not forget Spain, and the image of 5,000 fans jammed into the Palau Sant Jordi Arena, singing and dancing at a concert, masked (of course) but with no social distancing. All this translates into the return of more lockdowns, or longer ones at that. And that points to a slower recovery process for the Euro Area, which means the ECB will, in the words of President Lagarde, continue to use its “exceptional tools” for these “exceptional circumstances”.