EU crisis as ‘desperate’ eurozone fears double-dip recession in vaccine row

Coronavirus vaccine: European Union citizens receive their jabs

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Last week, the EU sought help in the US to try and give its vaccine rollout some momentum after controversy over the AstraZeneca jab. The Anglo-Swedish company slashed the amount of doses it would deliver to the EU earlier this year, leading to a tense political row. In January, French President Emmanuel Macron falsely claimed the Oxford-AstraZeneca vaccine was “quasi-ineffective” for over-65s, hours before it was approved by regulators for use on all adults in the EU. But take up of the AstraZeneca jab hasn’t been as high in Europe, contributing to the EU’s rollout delays.

This could prolong the economic crisis in Europe, described as its “darkest before dawn” by an economist.

The eurozone economy is almost certainly in a double-dip recession as COVID-19 lockdowns continue to hammer the services industry, but hopes for a wider vaccine rollout has driven optimism to a three-year peak, a survey showed last week.

Marcel Klok, senior economist at ING said in mid-February: “With lockdowns extended into the new year, it really feels like it is darkest before dawn in the euro zone. In the first quarter, GDP is all but certain to contract again and the question is now by how much.”

However, Mr Klok was optimistic the vaccine will eventually allow the eurozone to recover.

He added: “The combination of lockdowns and vaccinations will allow for more substantial reopening of economies over the course of the second quarter. This will then also mark the start of the recovery of the eurozone economy.”

Businesses on the ground also appear to be feeling the effects of the crisis.

Otto Linder, Chief Executive of family-owned Lindner Hotels AG, told the Wall Street Journal: “The second lockdown is much more brutal than the first. It’s getting desperate.”

Jessica Hinds at Capital Economics said last week that the eurozone economy will contract in the first quarter of 2021, and the vaccine struggles will delay any economic growth to the third quarter.

She said: “The slow vaccine rollout and rising case numbers in France and Italy means that the lifting of restrictions is likely to be delayed, pushing much of the vaccine-related bounce in activity into Q3.”

The vaccine debacle has left the EU’s economic recovery lagging behind, The Organisation for Economic Co-operation and Development (OECD) has said.

The think tank now expects UK growth of 5.1 percent this year – a major upgrade from its prediction three months ago when bosses forecast growth of 4.2 percent.

Meanwhile, the OECD only expects Eurozone growth of 3.9 percent – a hike of just 0.3 points from previous forecasts.

The eurozone’s economy shrank by 0.7 percent in the final quarter of 2020 according to new estimates today, a deeper fall than previously thought which puts the region on course for a double dip recession.

The UK economy expanded by one percent over the same period.

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Historian David Marsh told last year that the pandemic could lead to increased euroscepticism.

He said: “It will make it more difficult to rein in euroscepticism, which is why the Germans don’t really want to go down that route.

“The Germans are in quite a difficult position at the moment because on the one hand the monetary union has been hugely beneficial to Germany, on the other hand it isn’t popular to give away money to states who some feel haven’t been working hard enough.

“That’s why the Merkel governments have always been happy that the European Central Bank does all of the heavy lifting.

“If there was to be a transfer of assets or wealth through the front door from the north to the south, it would be politically very sensitive.

“This is why the German government on the whole has preferred to operate in rather stealthy fashion.

“The AfD (Alternative for Germany party) would no doubt profit on an upsurge in euroscepticism were that to happen, so it’s a really difficult political and economic balancing act.”

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