Fresh recession fears as Europe enters new lockdowns

New lockdowns across Europe will seriously affect a nascent economic recovery, but not hurt as badly as during the first coronavirus wave last spring, top officials said on Tuesday, November 3.

“The tightening of containment measures will evidently have an impact on economic activity,” the European Union (EU)’s economic affairs commissioner Paolo Gentiloni told reporters.

“But there are some reasons to believe that the impact could be smaller than in spring,” he added.

However, Gentiloni cautioned that forecasts were very difficult to make given the unpredictable progression of the coronavirus that has infected over 10 million people in Europe.

Klaus Regling, the head of the eurozone’s bailout fund, the European Stability Mechanism, said the deterioration of the health situation “has substantially increased the risks of a double dip recession” in the 19 countries that use the euro single currency.

“What we considered to be downside scenarios until recently, are now becoming our new baseline it seems,” he added, though he also was optimistic the situation would be an improvement from the economic crash seen in March.

The officials spoke after a meeting of eurozone finance ministers who urged quick approval of a massive EU stimulus package that is blocked in negotiations between European Parliament and member states.

Eurogroup chief Paschal Donohoe pushed member states and MEPs to maintain a “unity of purpose” to swiftly agree the package.

It is “an urgent priority for all of us because of its crucial importance in supporting economic recovery in the coming years,” said Donohoe, who is also the Irish finance minister.

Official data last week showed that the eurozone economy soared by 12.7% in the 3rd quarter.

The figure was historic, but it follows an equally unprecedented collapse of 11.8% from April to June as a result of pandemic. – Rappler.com