A top European Central Bank (ECB) policymaker has added his voice to rising concerns that renewed COVID-19 restrictions could cause a further downturn in the continent’s economy.
Already, Ireland and the Czech Republic have imposed a return to full lockdown mode due to a surge in COVID-19 cases. At the same time, hospitals in major European cities — such as Paris and Madrid — are already sounding the alarm that new increases in patient loads are not sustainable.
On Wednesday (Nov. 4), ECB policymaker and Bank of Spain Chief Pablo Hernandez de Cos warned that Spain and other European economies could slow down — and even contract. Reuters reported that he told Spanish lawmakers: “The widespread implementation of new measures to contain the health crisis could lead to a significant slowdown in the expansion of activity, and even to a contraction, at least in some countries or sectors in the fourth quarter.”
The 19-country eurozone’s economies contracted by 11.8 percent in the second quarter as COVID-19 lockdowns took effect, but they bounced back by 12.7 percent in the second quarter, from July through September, Reuters reported.
With more than 1.2 million cases and over 36,000 deaths, Spain has been particularly hard-hit by the pandemic. The recent increase in coronavirus cases means the worst of the ECB’s predictions for the Spanish economy — a downturn of 12.6 percent this year — has become more likely, de Cos said.
Europe was successful at curbing the pandemic during its first coronavirus wave in the spring. However, the price was high, as the continent experienced its worst economic downturn since the Great Depression. According to a study by McKinsey, more than half of Europe’s small to medium-sized businesses (SMBs) are likely to go under within the next year if their revenues don’t improve markedly. Italian and Spanish SMBs were particularly hard-hit by the economic and public health crisis.
