A double-dip recession in the Eurozone is ‘increasingly inevitable’ due to Covid-19, with France among the countries most seriously hit, experts have warned.
The slowdown in Eurozone business activities intensified in January as the pandemic continued to batter the economy, a key survey showed on Friday.
The closely watched PMI index compiled by IHS Markit is considered the earliest indicator of the state of the economy and the latest reading confirmed fears that the year-old virus crisis is still going strong.
France was among the hardest hit Eurozone nations, according to the closely watched PMI index compiled by IHS Markit, amid concerns over the country’s vaccination roll-out. Pictured: Metal barriers block the access to the pyramids of the closed Louvre museum in Paris
France was among the hardest hit Eurozone nations, with the news coming amid concerns over the country’s vaccine roll-out being slower than others.
Much hope has been put in the distribution of vaccinations to reopen the economy but the campaign in the EU is going at a slower pace than hoped.
Meanwhile in Britain, that left the EU on January 1, the relapse into a third national lockdown has sparked the sharpest drop in business activity since May, with services companies hit hardest, according to the survey.
The series of damaging lockdowns have been largely due to the spread of a more contagious strain of the virus.
A preliminary ‘flash’ UK Composite Purchasing Managers’ Index (PMI) fell to 40.6 in January, down from 50.4 in December, in the survey announced Friday.
However, Britain’s vaccination programme has been rolled out at a much faster rate than countries on the continent, partly thanks to its ability to avoid European red tape since Brexit, that is holding others back.
In the UK, 8.01 vaccine doses have been administered per 100 people, as of January 22. In contrast, France has seen just 1.26, Germany 1.67 and Spain 2.36.
Pictured: Bournemouth International Centre in the UK. Britain’s vaccination programme has been rolled out at a much faster rate than countries on the continent, partly thanks to its ability to avoid European red tape that is holding others back
Pictured: A graph showing Cumulative Covid-19 vaccination doses administered per 100 people, as of January 22, in European countries
‘A double-dip recession for the eurozone economy is looking increasingly inevitable as tighter Covid-19 restrictions took a further toll on businesses in January,’ Chris Williamson, chief business economist at IHS Markit, said.
This meant that the economies of the 19 countries that use the single currency, dominated by Germany and France, would sink back into recession after only a very short recovery over the European summer.
The firm’s closely watched PMI index fell from 49.1 points in December to 47.5 points this month, further away from the 50-point level which indicates growth.
Williamson noted however that the bad start to 2021 would be less damaging than the economic collapse seen in the first wave of the pandemic last year.
This was due to the ‘ongoing relative resilience of manufacturing, rising demand for exported goods and the lockdown measures having been less stringent on average than last year,’ he said.
The difference between France and Germany was notable.
The near-empty Pariser Platz square in front of Berlin’s landmark Brandenburg Gate (Brandenburger Tor) reflected in a shop window on January 22, 2021. Europe’s top economy Germany this week extended its partial lockdown until February 14, 2021. A preliminary ‘flash’ UK Composite Purchasing Managers’ Index (PMI) fell to 40.6 in January, down from 50.4
German exports managed to keep the country narrowly on a growth trajectory, while French business activity sank.
The situation for the rest of the eurozone, accounting for a little more than half of the bloc’s economy, was even worse.
Worryingly, employment across the eurozone fell for an eleventh consecutive month, albeit with modest increases in France and Germany, IHS Markit said.
The bleak picture confirmed a warning by European Central Bank chief Christine Lagarde who saw ‘serious risks’ still looming over the eurozone economy.
The rollout of vaccines had instilled ‘a strong degree of confidence’ but ‘the recent rise in virus case numbers has caused some pull-back in optimism,’ Williamson said.