Source - Daily Telegraph Economic intelligence news E mail 30/03/21
By Ambrose Evans-Pritchard
and Jeremy Warner
How the tables turn. Less than a year ago, the UK was Europe’s pariah. Having only recently Brexited, Britain’s early handling of the pandemic looked shambolic and incompetent; the grim hat trick of the worst per capita death rates among major economies, the biggest economic contraction, and the greatest hit to the public finances was fast looming into sight.
It was a humiliating spectacle, leading me in one column to depict the country as a “ship of fools”, after Plato’s Republic in which the only qualification for captaincy was to have no knowledge of the seas whatsoever. One disaster seemed to follow another.
But behind the scenes, the Government was actually getting one thing spectacularly right, and as it turns out, it is proving the most important of them – vaccine strategy.
That success is now starting to pay dividends in what looks to be a fast recovering economy. In Britain we have falling deaths, falling hospitalisations, fast vaccine rollout and a steady lifting of restrictions.
On the Continent, they have the reverse. Europe is heading into the storm even as the UK sails away from it. Rather than Britain, it is the EU’s political leaders and institutions that now look wanting as a grimly destructive third wave sweeps across a still substantially unvaccinated Continent. The reversal in fortunes could hardly look more striking.
Now admittedly, even in the UK the fall in new infections has tailed off and now seems to have plateaued; inevitably they will begin to rise again as restrictions are lifted, so it may be unwise to speak too soon. But assuming vaccines work as they are supposed to, this should not be followed by a renewed surge in hospitalisations and deaths. Fingers crossed, the worst now seems to be over for the UK. Not so the Continent.
Nothing could be more symbolic of the confusion in policymaking that now rules in the EU than the spectacle of Angela Merkel, the German Chancellor, apologising for having ordered an Easter lockdown, and under pressure from regional heads of state, reversing her position accordingly. There was by the way some logic in the madness, in the sense that locking down over Easter would have concentrated weeks of grocery shopping into a single day, when the virus might as a consequence have spread like wildfire.
You have to admire her for candour at least, a rare thing in a politician and a trait not much in evidence in her opposite number at the Élysée. She blames Germany’s vaccine blunders on institutional bureaucracy, and the very German characteristic of “over perfectionism”. Germany was aiming for “vorsprung durch technik” but instead its search for perfection left it trapped in the slow lane.
The EU is of course still planning to have its entire adult population vaccinated by the end of September, which even after the latest series of mishaps remains eminently possible. So all other things being equal, its major economies will eventually, probably from the third quarter onwards, begin to see something of a catch up with the US and the UK. But for Club Med nations, the summer season looks as if it will again be largely a write-off.
Germany and France will meanwhile experience major contractions in the second quarter as renewed lockdown bites, unlike Britain, which will be bouncing back sharply. It’s even possible that the first quarter will show little or no negative growth, such has been the economy’s ability to adapt to lockdown constraints. But it’s a different story on the other side of the Chanel.
To the disappointment of hardline eurosceptics, all this is unlikely to be terminal for the European project; indeed it might lead to some much needed reform. But it has once again highlighted the inherent difficulties of getting 27 sovereign nations to act collectively and effectively when crisis hits. In this sense, what we are seeing is a repeat of what happened during the eurozone debt crisis; when tested, the one size fits all approach routinely fails.
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