The new year was supposed to bring improved economic fortunes across Europe, as coronavirus vaccines made their way into the bloodstream.
Instead, the eurozone economy shrank at the end of 2020, according to official figures out Tuesday, raising fears of a double-dip recession and demonstrating that the pandemic is likely to remain a force for at least a few more months in the face of the European Union’s pronounced failure to distribute vaccines.
Economic output in the 19 countries that belong to the eurozone fell 0.7 percent in the fourth quarter from the previous quarter, according to a preliminary estimate by the European Union’s official statistics agency. For the full year, overall output fell 5.1 percent.
Europe is now likely to suffer continued economic contraction over the first three months of 2021 and perhaps into the early part of the next quarter, as governments are forced to maintain restrictions on commercial life, according to a report released Tuesday by Oxford Economics in London.
“There is definitely a risk that vaccine distribution continues to be disappointing,” said Tomas Dvorak, a eurozone economist with Oxford Economics. “There is risk that the second quarter will also get quite bad.”
The failure of European governments to get vaccines to their citizens could create a political backlash, fueling resentment toward Brussels and souring the already uneasy relations among the 27 countries that belong to the European Union. Competition for vaccines has already strained the bloc’s relations with Britain.