GP Insights # 346, 2 May 2020
In a week, a host of European countries started easing their coronavirus lockdown and moving towards reopening their economies. The region is now set to look beyond the pandemic. Germany will be easing out of the lockdown by 3 May but with a caution against carefree travel during the summer holidays ahead. From 27 April the country has allowed bikes shops and bookstores to reopen. Italy which has seen 27,000 deaths, more than any country in Europe, will ease restriction from 4 May.
France along with Spain are going to gradually exit in phases from their strict coronavirus lockdowns, with restrictions to be loosened progressively and varying from region to region. Both France and Spain had the harshest lockdown measure, and early this week, Spain has allowed children of 14-years-old to go outside once a day for one year. The country is likely to open hotels from the second week of May. In Europe, as Boris Johnson returns to work after recovering from the virus, all is not well for the UK. The UK has passed the peak but is not yet ready to lift the lockdown and will lay out the roadmap only next week.
What is the background?
Three issues contributed to the easing of the lockdown in Europe. First, the easing of the restrictions followed after most of the countries registered a low death rate, but the reproduction number has not slowed down yet. This indicates that the average infection rate of the people has not reduced. Spain which recorded more than 2,30,000 cases and 24,000 deaths had registered only 300 deaths in a day and no spike in cases since 26 April.
Second, public discontent over the continued lockdown is increasing among many countries. But having slowed the virus's spread, many people believe its dangers have been passed, and the country should get back to work to take stock of the economic costs from the lockdown. Ignoring the restrictions on gathering, Berliners protested against the lockdown, which is seen as a violation of individual freedoms. Last, the lockdown follows another significant event when the European Union declared a recovery fund that would ensure fiscal stimuli into the cash-starved European economy.
What does it mean?
The reopening of Europe means the region is going to adapt to a 'new social normal,' the opening of the market will bring out the losses distinctly, and the resilience of the polity will once again be tested with the economic challenges.
First, ban on large gatherings, wearing of face masks and work from home will transform the communitarian and group interactions drastically with an extent that virtual communities will be in vogue. In addition, mundane habits like eating in restaurants, reading books, watching movies will shift to digital platforms and e-commerce might dictate the chain of market economies more in Europe.
Second, the pandemic has increased the rate of unemployment in the service sector as a large section of people are working from home. Tourism that is the core of the European economy apart from manufacturing has been severely affected by Greece staring at bankruptcy. This is likely to bring back memories from the debt crisis and austerity measures that were put in place in Greece. For the countries to normalize tourism, Europe might be debating on tourist corridors with a regulated movement of people.
Last, the pandemic has also tested the resilience of the political structure, and the reopening will bring out the distinct fault lines. While the cooperative federalism fought the crisis better, the centralized polity in France faced domestic criticism of mishandling the crisis with faulty decision making by President Macron. Even though Germany's federal response has been hailed, it is also setting a dangerous precedent of rushing out of the lockdown too early.