A double dip recession in the eurozone is ‘increasingly inevitable’ as a result of Covid-19, with France among the most affected countries, experts have warned.
The business slowdown in the eurozone intensified in January as the pandemic continued to hit the economy, a key study on Friday showed.
The closely watched PMI index compiled by IHS Markit is considered the first indicator of the state of the economy, and the last reading confirmed fears that the one-year virus crisis is still strongly underway.
France was one of the hardest hit countries in the eurozone, according to the closely monitored PMI index compiled by IHS Markit, amid concerns about the introduction of vaccinations in the country. Pictured: Metal barriers block access to the pyramids of the closed Louvre in Paris
France was one of the hardest hit countries in the eurozone, and the news came out of concerns about the slower roll-out of vaccines than others.
Much hope has been placed in spreading vaccinations to reopen the economy, but the campaign in the EU has been slower than hoped.
Meanwhile, in Britain, which left the EU on January 1, the fall into a third national lockdown has led to the strongest decline in business activity since May, with service companies being hit hardest, according to the survey.
The series of harmful lockdowns is 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 from 50.4 in December, in the survey announced Friday.
However, Britain’s vaccination program has rolled out much faster than the countries on the continent, in part thanks to its ability to avoid European red tape since Brexit, holding others back.
In the UK, 8.01 doses of vaccine were administered per 100 people on January 22. In contrast, France has only 1.26, Germany 1.67 and Spain 2.36.
Pictured: Bournemouth International Center in the UK. Britain’s vaccination program has rolled out much faster than the countries on the continent, thanks in part to its ability to avoid European red tape that holds back others
Pictured: A graph showing the cumulative Covid-19 vaccination doses administered per 100 subjects in European countries on January 22
“A double dip recession for the eurozone economy seems increasingly inevitable as tougher Covid-19 restrictions in January took a further toll on businesses,” said Chris Williamson, chief business economist at IHS Markit.
This meant that the economies of the 19 countries using the single currency, dominated by Germany and France, would fall back into recession after only a very brief recovery during 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 indicating growth.
Williamson noted, however, that the bad start to 2021 would be less damaging than the economic collapse of the first wave of the pandemic last year.
This was due to the “continued relative resilience of production, rising demand for exported goods and the lockdown measures which were on average less stringent than last year,” he said.
The difference between France and Germany was remarkable.
The nearly empty Pariser Platz square in front of Berlin’s signature Brandenburger Tor (Brandenburg Gate) was reflected in a shop window on January 22, 2021. Europe’s top economy Germany extended its partial closure this week until February 14, 2021. A preliminary ‘flash’ UK Composite Purchasing Managers’ Index (PMI) fell from 50.4 to 40.6 in January
German exports managed to keep the country close to a growth trajectory, while French activity declined.
The situation for the rest of the eurozone, which makes up just over half of the bloc’s economy, was even worse.
It is worrying that employment in the eurozone has fallen for the eleventh straight month, albeit with modest increases in France and Germany, IHS Markit said.
The gloomy picture confirmed a warning from European Central Bank chief Christine Lagarde, who saw that “serious risks” were still lurking for the eurozone economy.
The introduction of vaccines had provided “strong confidence,” but “the recent rise in virus cases has caused some setbacks in optimism,” Williamson said.
Renewed lockdown causes the UK economy to collapse again, PMI research shows
Britain’s pullback to a third national COVID-19 lockdown has led to its strongest decline in business activity since May, with service companies hit the hardest, an investigation revealed on Friday.
A preliminary flash IHS Markit / CIPS UK Composite Purchasing Managers’ Index (PMI) fell to 40.6 in January from 50.4 in December.
The drop below the 50 threshold for growth was greater than any economist predicted in a Reuters poll, which pointed to a reading of 45.5.
In addition to the latest lockdown, data company IHS Markit said Britain’s post-Brexit shift to a more bureaucratic trade deal with the European Union contributed to the decline.
“ Services have been particularly hard hit again, but manufacturing has nearly halted growth, due to a cocktail of COVID-19 and Brexit, which has led to increasing delays in supply, rising costs and declining exports, ” says Chris Williamson, chief business. economist at IHS Markit, said.
The rate of job losses has accelerated after it slowed in December.
England is currently in its third lockdown due to Covid 19. Restrictions mean people cannot leave the house separately for work, exercise and shopping for pubs with essential items.
Economists polled by Reuters last week predicted a 1.4% decline in production for the first quarter.
The official death toll from COVID-19 in the United Kingdom is approaching 100,000 and is currently the highest in Europe and the fifth worst in the world, after the United States, Brazil, India and Mexico.
Britain is rolling out vaccines faster than many of its peers, which should predict a rapid economic recovery later this year.
Thursday’s survey found that companies were optimistic about their business outlook for the year ahead, with optimism hitting as high as 6-1 / 2 years.
The services PMI, which accounts for most of the UK private economy, fell from 49.4 in December to 38.8 in January, its lowest level since May, marking a third month of contraction.
The factories fared much better, despite slowing production growth and a renewed decline in order books. The manufacturing PMI fell from 57.5 in December to 52.9 in January, remaining above 50 for growth.