The rapid spread of the Delta coronavirus variant is causing economists to worry that Europe’s brightening economic outlook risks being undermined by rising infection levels and the reintroduction of travel and social restrictions.
The lifting of most lockdown measures across the region in recent months has led to a surge in business activity, retail spending and household confidence, prompting many economists to upgrade their forecasts for European growth.
However, those assumptions are being thrown into doubt now that the highly infectious Delta variant already accounts for the majority of new cases in many European countries and is driving infection rates up to their highest level for months.
“I’m a bit more nervous than it could get derailed by Delta,” said Erik Nielsen, chief economist at UniCredit, which has raised its eurozone growth forecast for this year from 4 to 4-5 percent. “It has to get quite bad before we get another lockdown, but Google mobility data shows that it is not so much the lockdowns that drive behavior but voluntary restraint.”
Bank of Spain, said its forecasts for strong growth were “based on the assumption that the health crisis would be over after the summer” and that Spain’s tourism sector would achieve half its pre-pandemic income this summer, up from a fifth last year. He warned that there was still “uncertainty surrounding the emergence of new Covid-19 variants and the containment measures that these might necessitate”.
On Friday, Germany and France warned their citizens against travel to Spain, where the coronavirus infection rate has surpassed Portugal to become the highest in mainland Europe, dealing a blow to its tourism sector at the start of the crucial
The Netherlands said on Friday it would reintroduce restrictions on restaurants, bars, cafés, nightclubs and live events — only two weeks after lifting them — because of a more than tenfold rise in the country’s daily infection rate to almost 7,000 in that period.