July 1, 2020 PAP-Q2-20-NI-003
The SARS-CoV-2 virus first appeared in China and initially spread from there to several other countries via air travel, including South Korea, Italy, Russia, Germany, India, and the United States. An analysis of the index cases of the first infected individuals in different countries by The Intercept revealed that many more originated from European countries (93, with 46 traced back to travel from Italy) than China (27).1
Indeed, the COVID-19 virus escalation from epidemic to pandemic can be attributed to the slow response of European countries, most specifically with concerning air travel, but also with respect to lockdown measures, COVID-19 IMPACTS testing, and contact tracing. Many European countries, it seems, were modeling their responses based on those taken to the 2003 SARS epidemic, which, unlike COVID- 19, was largely contained in Asia.
In Italy, the first official case was discovered on February 21, 2020. One month later, the country was shut down. Despite observing the impact of SARS-CoV-2 in China and other Asian countries, and warnings from scientists about the potential for high levels of infections, Italian politicians were still shaking hands in public to demonstrate their lack of concern over the virus.2 A lack of epidemiological capabilities also likely contributed to the rapid spread of the virus soon after it entered the country.
In addition, the Italian government took a partial approach to containment, ultimately resulting in lockdowns occurring after the virus was already present rather than before, when doing so could have reduced its spread. Where local communities did take a proactive approach to minimizing the spread and keeping people out of hospitals unless necessary — such as in Veneto — hospitals were not overburdened, and the spread of the virus within medical facilities was minimized.
The disparate responses in Italy by the federal government and local communities were also reflected across the entire European Union, with each country following its own course independent of other EU members. Rather than build solidarity, the COVID-19 pandemic has drawn out nationalist responses.3
Borders between EU countries have been reestablished — from informal barricades to soldier-manned stations — and approaches have varied widely. France took severe steps when establishing a lockdown, while Sweden adopted a less stringent approach, asking its citizens to voluntarily stay home and shutter businesses. Germany leveraged its ability to produce diagnostic tests to take control of the viral spread. Hungary’s Prime Minister Viktor Orbán took the opportunity to increase his constitutional powers. Italy’srequests for assistance were largely ignored by other EU member states, even after the European Commission (EC) activated the Civil Protection Mechanism. There was also significant disagreement on what a coordinated European economic response should entail.
By mid-March,4 Italy, the hardest-hit country, was in a nationwide lockdown. In France, schools were closed, nonessential surgical operations postponed, and gatherings of more than 1,000 people banned. Several of Spain’s cabinet ministers and parliament members had tested positive, leading to a halt of parliamentary meetings. Schools and universities were closed, and events with more than 1,000 participants cancelled. The regional government of Andalusia, however, refused to cancel Holy Week festivities.
Finland was the most prepared for the virus, making communicable disease insurance for quarantined people available as early as January. Germany implemented border control checks and quarantined potentially infected people. Some regions closed schools and cancelled events with more than 1,000 people. The response was similar in Austria, where cinemas were closed and the number of people allowed at indoor (100) and outdoor (500) events was limited. Large sporting events were scheduled to take place without spectators. Denmark banned events with more than 100 people, while the Netherlands implemented a stay-at-home policy, although primary and secondary schools remained open.
In Sweden, those with symptoms were advised to minimize social contact, and gatherings of 500 or more people were banned. Unlike most European nations, the country did not close its borders, schools, or businesses, although it did recommend that people work from home if possible.5
A similar approach was taken in the United Kingdom, and the government worked to avoid cancelling events.4 The Queen continued making appearances, though without shaking hands. Portugal recommended banning indoor events of more than 1,000 people and had a plan in place to double hospital staff if necessary.
The Greek Supreme Court ruled that violation of measures established to reduce the spread of COVID-19, such as closure of gyms and movie theaters, and the banning of large gatherings should be treated as a crime. Public sector employees were expected to work from home where possible. Perhaps these different responses should not be surprising. Public health and fiscal policy are the purview of the individual member states and not the central EU government.6 However, health and financial policies do have impacts that cross borders — just like the SARSCoV- 2 virus.
More recently, the EC has been attempting to exert efforts to organize a united European response, such as trying to coordinate the distribution of resources. The initial reluctance of the European Central Bank (ECB) to take action also negatively impacted financial markets. Since then, the ECB has reversed course and announced a Pandemic Emergency Purchasing Program.
The EU launched the Corona Response Investment Initiative, which will provide up to €37 billion to support national healthcare systems, SMEs, labor markets, and other vulnerable parts of economies.
As the pandemic worsened, most European countries did eventually close down nonessential businesses, ban all public gatherings, and require social distancing. The earliest to do so, other than Italy, were France and Austria. By April 15, the number of global COVID-19 cases surpassed 2 million, and the virus was attributed with causing more than 130,000 deaths.7
Despite the fact that the number of cases doubled over the previous 13 days — and were still climbing in other parts of the world — discussions on emerging from the various lockdowns were taking place in Europe. And it was clear once again that despite efforts by the EC to organize a concerted exit — and warnings that reopening economies too soon could lead to a resurgence of the virus — most countries had plans of their own.8
While the general economic lockdown was to remain in place for several additional weeks, Germany allowed small stores to reopen on April 20 if they followed strict hygiene measures and consumers maintained social distancing, with mask-wearing recommended. The Czech Republic and Austria adopted these same measures. The latter, which experienced its peak of COVID-19 cases on March 26, began on April 14 allowing nonessential, small shops to open first, while still requiring face masks.9 They were also urged by the government to use the Red Cross app for tracking infections. Restaurants and bars were expected to open in mid-May.
In Italy, bookshops, children’s clothing stores, and forestry businesses were allowed to reopen.8 Belgium, France, the UK, Ireland, Poland, and Hungary elected to keep restrictions in place until at least various dates in May. In Spain, some industrial and construction workers were allowed to return to work in the middle of April. Denmark reopened some daycare and elementary schools. By mid-April, Sweden was under increasing pressure to put stricter measures in place.
With no ability to affect the movements of individual EU members, the EC dropped its roadmap for ending lockdowns and shifted focus to coordinating the opening of the pan-European border.8 The EC’s first recommendation in mid- April was to keep the EU’s visa-free travel area closed to nonresidents for the foreseeable future.
The COVID-19 pandemic is expected to result in significant worldwide recession due to the halting of economic and social activities in many countries. The economic impact is predicted to be worse than the global recession caused by the 2008 financial crisis. Countries and pan-regional organizations have responded with bailout packages that could, in total, be worth more than $10 trillion.10
To counteract economic shrinkage of up to 10%, Germany has for the first time eased its restriction to maintain a balanced budget and set aside at least €350 billion (~10% of its GDP) to bail out struggling businesses through its short-term government work program and by making unlimited loans and potentially taking equity stakes.
The United Kingdom was, before the COVID-19 pandemic, already facing a potential recession resulting from Brexit. The virus could potentially cost the country 5–10% of its economy in 2020. The government has committed to paying 80% of workers’ salaries for several months to keep companies from resorting to huge layoffs. It’s also increasing unemployment benefits, reimbursing self-employed people for lost wages, providing loans to small and midsized companies, and propping up charities.
The EU launched the Corona Response Investment Initiative, which will provide up to €37 billion to support national healthcare systems, SMEs, labor markets, and other vulnerable parts of economies.11 In addition, the Support Mitigating Unemployment Risks in Emergency (SURE) initiative is designed to protect jobs and workers affected by the COVID-19 outbreak by providing financial assistance of up to €100 billion in total to member states in the form of loans granted on favorable terms. A budget of €80 million was also set aside to create a strategic EU stockpile of medical equipment, including ventilators and protective masks. The EU is also allocating €140 million of public and private funding to support the development of SARS-CoV-2 diagnostic tests, treatments, and vaccines.
Separately, Eurozone finance ministers agreed to a €500 billion package to provide emergency lending and other assistance to member countries, businesses, and workers.10 The ECB, meanwhile, launched the Pandemic Emergency Purchase Program (PEPP), an asset-purchase program to buy public and private-sector securities worth €750 billion to support member countries, in addition to €120 billion committed early in March.11 In total, the emergency stimulus adds up to 7.3% of Euro area GDP.11
Kshitij (TJ) has been a part of Nice Insight since 2014. TJ’s role involves research design and operations, developing and maintaining syndicated studies, business intelligence data analysis, content development and article writing on the latest developments in the biopharmaceutical industry. Prior to market research, TJ spent time in academia research working on a broad range of subject matter, including pharmacoeconomics, drug delivery and genetics. TJ holds a masters of biotechnology degree from the University of Pennsylvania.