Berlin is gradually entering the midsummer time: more and more people go to parks and lakes to bask in the sun, major restaurants are full of customers, and people who go to hair salons will no longer show a negative certificate for the new coronavirus nucleic acid test. Berlin even had no new confirmed cases of new coronary pneumonia on June 27.
At the end of June, many places in Europe finally ushered in a pleasant summer. France reported 29 deaths from new coronary pneumonia at the end of June. This is the day with the fewest deaths since September last year. People gathered on the banks of the Seine to celebrate the end of the seven-month curfew and blockade. Spain has cancelled the outdoor mask order, and the streets and terrace bars of Madrid and Barcelona are full of people who do not wear masks. On the evening of June 26, bars across Italy were crowded with fans, cheering for the Italian football team participating in the Euro Cup.
“People think that the new crown epidemic is coming to an end.” said Christopher Dembik, head of research and strategy at Saxo Bank. “Everyone thinks that the new crown epidemic will finally pass.”
Despite the obvious positive news, European travel stocks opened sharply at the end of June. The highly contagious delta variant of the new crown pneumonia virus (first discovered in India and currently spreading rapidly in the UK) has been confirmed as more and more confirmed cases, leading to Europe Governments are worried about the emergence of a new wave of epidemics, and the enactment of new travel restrictions may make Europe’s summer tourist season another hit.
The spread of Delta mutant strains will have a major impact. With the end of months of strict blockade, the euro zone has once again ushered in its reopening, and the opening of borders is vital to the economic development of the euro zone. People have high expectations for 2021, and store owners, hoteliers and restaurant owners are preparing for the peak summer sales season.
But the delta mutant strain casts a shadow over all this, because even some fully vaccinated adults are infected with the delta mutant strain.
“Loss is unimaginable”
Portugal, Germany, Italy and Spain have announced the tightening of restrictions on British tourists. In cities such as Edinburgh and Manchester, the number of new cases per 100,000 people in 7 days exceeds 400. These cities are classified as the “red” zone of the European Union.
As of June 28, passengers who have entered Portugal from the UK who have not been vaccinated with the new crown vaccine must undergo a 14-day quarantine after entry. On June 29, Spain announced new regulations requiring passengers entering the United Kingdom to provide a certificate of negative test for the new coronavirus or a certificate of vaccination. The United Kingdom is no longer included in the list of no travel restrictions. Germany has implemented new and stricter anti-epidemic restrictions on tourists from Portugal and Russia, and included them in the current list that only includes the United Kingdom.
At the same time, Italy stipulates that all tourists entering the United Kingdom must be quarantined for five days after arrival, and only if they have tested negative for the new coronavirus multiple times can they leave.
Italian Prime Minister Mario Draghi has a particularly tough attitude on EU border policy. This worries Italian hoteliers.
“People who come here have to undergo quarantine for a week or a whole weekend. This is unbelievable. The Russian and British markets are very important to us, we may face losing them, and everyone will suffer huge economic losses.” Italy Ai Alessandro Giorgetti, head of the hotel trading group in the Milia-Romagna region, said in an interview with the Italian daily Corriere Romagna.
The stock market fell and the euro was also affected
The new restrictions have made investors fearful all day long. On June 28, travel and leisure stocks plummeted, and the STOXX 600 travel and leisure index plummeted by 4.35%. Among southern European countries that rely heavily on tourism, Italy’s FTSE MIB index (FTSE MIB) fell 1.1%, and Spain’s IBEX35 index fell nearly 2%. On the morning of June 29, the shares of Spanish travel companies Amadeus, IAG and Meliá Hotels (Meliá Hotels) fell again, down about 2%. The shares of German tour operator TUI Group plunged 4%.
Of course, the euro has also been affected. In recent weeks, it has fallen by more than 3%, and the foreign exchange rate has fallen sharply. The capitals of the euro zone are not immune.
Economic and political influence
In order to curb the spread of delta mutant strains, European governments are willing to put tourism-which accounts for more than 12% of GDP in southern European countries-such an important industry at risk, showing that they realize that both politically and economically , They can’t afford the resurgence of the new crown virus.
“The only obstacle to resuming strong growth in 2021 and basically returning to normalcy in 2022 is still the mutant strain.” French Minister of Economy Bruno Le Maire said on CNews on the morning of June 29. “The delta mutant strain is the only risk that really affects growth.”
Le Maire predicted in May that GDP plummeted by 8.2% in 2020 and is expected to grow by 5% this year. He still said that although GDP is expected to grow by 5%, it still depends on the proportion of new crown vaccination among millions of French people. The French National Bureau of Statistics (INSEE) estimates that the strictest lockdown imposed in the spring of 2020 has caused the government to spend nearly 1 billion euros a day.
Both French President Emmanuel Macron and German Chancellor Angela Merkel’s successors will face national elections next year. The resurgence of the new crown epidemic, coupled with new blockade measures, may make the poll results unfavorable for them. .
“It’s a big mistake not to pay attention to the delta mutant strain,” the governor of Bavaria, Marcus Soder, said on June 28. He expects that the delta mutant strain will soon sweep Germany.
The current infection rate is low
At present, the infection rate in Europe is still very low. Although the statistics of zero cases in Berlin on June 27 were partly due to the weak weekend reports in Germany, it also symbolically reflects the local situation. The number of new cases in Berlin continues to decline, with only 5.9 new cases per 100,000 people in 7 days.
Spain reported 10 deaths over the weekend, with a death ratio of 51.5:1. However, the infection rate continues to rise. The large-scale school graduation trip to Mallorca caused more than 1,100 people to be infected across Spain, and more than 5,000 people were quarantined. The government and the stock market fell into panic again. This place has just lifted the new crown for nearly 18 months With the virus epidemic prevention and control measures, the economy has just begun to recover.
At the end of June, Chancellor Merkel, in what may be her last speech to the German parliament-she will no longer participate in the September federal election-urged everyone to proceed with caution. She warned that due to the rapid spread of the delta mutant strains around the world, Germany and EU countries “walk on thin ice, and we must always be vigilant.” (Fortune Chinese website)
Assistant Reporter: Bernhard Warner, a journalist based in Rome.
Translation: Hao Xiu
Reviewer: Wang Hao
Summer in Berlin was shaping up to be glorious: People are soaking up the sun in parks and on lakeshores, restaurants are full again, and you no longer need to get a COVID test to visit the hairdresser. There were even no new cases recorded in the city on June 27.
Summer’s optimistic arrival was repeated across Europe at the end of June. People crowded along the banks of the Seine, celebrating the end of seven months of nighttime curfews and lockdown restrictions as France reported 29 deaths at the end of June, the lowest rate since September last year. In Spain, the sidewalks and terrace bars of Madrid and Barcelona filled with maskless residents as the country dropped its outdoor mask mandate. Across Italy, bars filled up on June 26 night as fans cheered on the Italian soccer team in the Euro Cup tournament.
“Everyone is buying this story that this is the end of the pandemic chapter,” says Christopher Dembik, director of research and strategy at Saxo Bank. “There’s a feeling that this is more or less over.”
But despite the apparent good news, European travel stocks crashed as the week began, with rising case numbers of the highly transmissible COVID-19 Delta variant (first found in India, and now widespread in the U.K.) leading European governments to worry aloud about a new disease wave—and to enact new travel restrictions that threaten to put the continent’s vital summer tourist season at risk.
There’s a lot on the line. Open borders are key to the eurozone’s economic fortunes as months of strict lockdown measures give way to yet another grand reopening. The 2021 version comes with even higher expectations as shop owners, hoteliers, and restaurateurs make plans for a big summer.
The Delta variant, which is even infecting some fully vaccinated adults, threatens to dash all that.
“Unthinkable damage”
Portugal, Germany, Italy, and Spain all announced enhanced restrictions, largely related to travelers from the U.K., where the seven-day case load per 100,000 inhabitants in cities like Edinburgh and Manchester surpassed 400, putting them well into the EU’s “red” zone.
As of June 28, unvaccinated U.K. travelers to Portugal will have to quarantine for two weeks. On June 29, Spain published new rules obliging people entering from the U.K. to provide a negative COVID test or proof of vaccination, reversing a previous plan that put the U.K. on an unrestricted travel list. And Germany placed tough new quarantine restrictions on travelers from Portugal and Russia, adding them to a list on which only the U.K. had appeared.
Italy, meanwhile, now mandates that all travelers entering the country from the U.K. go into quarantine upon arrival. They cannot exit isolation until five days have passed, and only after they’ve produced multiple negative COVID-19 tests.
Italian Prime Minister Mario Draghi has taken a particularly hard line on EU border policy. That has Italy’s hotel operators worried.
“It is unthinkable that one would come for a week or a long weekend having to undergo quarantine. The Russian and English markets are significant for us, and we risk losing them with more than significant economic damage for everyone,” Alessandro Giorgetti, head of the hotel trade group for Italy’s Emilia-Romagna region, told the Italian daily Corriere Romagna.
Stocks sink, euro slides
The new restrictions are making investors jumpy. Travel and leisure stocks crashed June 28, with the STOXX 600 travel and leisure index plunging 4.35%. In tourist-dependent southern Europe, Italy’s FTSE MIB dropped 1.1%, and Spain’s IBEX 35 fell almost 2%. On June 29 morning in Spain, travel firms Amadeus, IAG, and Meliá Hotels all fell again, down by some 2%. And German tour operator TUI Group tumbled 4% lower.
Not surprisingly, the euro is under pressure, too, down more than 3% in recent weeks, a big drop in foreign-exchange terms. And the pressure is being felt in national capitals across the bloc.
Economic and political fallout
The willingness of European governments to put at risk an industry as vital as the travel sector—which accounts for more than 12% of GDP in southern European countries—in order to curb the Delta variant is proof of their realization that they cannot afford a resurgence of the pandemic, either politically or economically.
“The sole obstacle remaining on the path to a very strong return to growth in 2021, and a return to total normality in 2022, is the risk of variants,” Bruno Le Maire, France’s economy minister, said on network CNews June 29 morning. “The Delta variant is the only real risk for growth.”
Le Maire predicted 5% growth this year in May, after a disastrous 8.2% drop in GDP in 2020, and said that while that was still expected, it depended heavily on millions of French people being vaccinated against COVID-19. In France, the statistics agency INSEE estimated that the strictest lockdown, imposed in spring 2020, cost the government about €1 billion a day.
Both French President Emmanuel Macron and Angela Merkel’s successor in Germany face national elections in the next year, and a resurgence of the pandemic, with new lockdowns, could well scuttle their chances at the polls.
“Ignoring the Delta variant would be a serious mistake,” warned Markus Söder, the state premier of Bavaria, on June 28. Söder said he expected the Delta variant to soon become dominant in Germany.
Low infection rates—for now
For now, infection rates in Europe remain low. While Berlin’s zero-case count on June 27 is partly a product of Germany’s weak weekend reporting, it is a symbolically powerful reflection of reality on the ground. The capital’s new-infection rate has continued to fall, and currently stands at a mere 5.9 cases per 100,000 inhabitants over the past seven days.
In Spain, which reported 10 deaths over the weekend, the rate is 51.5. But infection rates have been creeping up, and superspreader events like massive end-of-school parties in Mallorca, which resulted in over 1,100 infections and 5,000 people in quarantine across Spain, have struck fear into the governments—and stocks—of a continent only just recovering from almost 18 months of punishing antivirus measures.
At the end of June, Chancellor Angela Merkel used what was probably her final address to Germany’s parliament—she will step down at September’s federal election—to urge caution. Germany and the wider European Union are “skating on thin ice,” she warned, thanks to the Delta variant. “We must remain vigilant.”
With additional reporting from Bernhard Warner in Rome.