By Bartek Maj
As Europe becomes the epicentre for this pandemic, leaders scramble to contain it whilst death tolls continue hitting new records. Italy has suspended sports events, cinemas, theatres and gyms until 3 April, France shut down schools and universities until further notice whilst Spain cancelled any events above 1000 participants. France, Italy and Spain have all reached specific stages in the spread of the virus. As such, other countries are likely to follow when they reach this point due to fear and public pressure forcing even reluctant leaders to act.
It is also likely that countries will look inward as the crisis progresses. Italy has put severe restrictions on movement between cities, France has suspended flights from Italy until the 3 April and thousands of travellers are stuck in Spain as flights from Barcelona and Madrid are rejected by foreign airports. On the 16 March Germany closed its borders with France, Austria and Switzerland whilst its borders with Poland, the Czech Republic and Denmark were already closed through previous measures. European freedom of movement will continue to collapse as leaders hope to prevent the virus from spreading.
Increasing financial aid from governments can be expected as the virus progresses. The Royal Bank of Scotland said loan or mortgage payments can be delayed for up to 3 months if customers experience financial difficulties due to the virus. The Italian economic ministry said mortgage payments would be suspended. Certain countries will need to support its citizens more than others, only 13% of Italian households have mortgages on them compared to 28% in the UK, however the point stands: as the pandemic progresses millions will be out of work and governments will need to step in. Denmark is an example of more active support for the private sector: companies who lose 30%+ or 50+ of its employees can apply for wage compensation if they don’t let their staff go, as the Danish government expects to cover 70,000 people on the scheme which is to run until the 9th of June. This kind of direct support will be required from governments as companies are forced to let go of their employees as the economy slows down, however it is uncertain to what extent this will happen. Whilst Scandinavian countries have strong welfare safety nets, states without this framework in place might fail to provide such support.
Businesses will have to become flexible, some are already making a transition to online work, however not all will be able to do so causing mass falls in production levels and unstable employment. The car industry has been hit hard by this, Chrysler hinted at shutting down some of its Italian factories whilst Lamborghini is shutting one of its Italian plants until 25 March. 16.4% of Germany’s exports are vehicles with big names like Volkswagen, Daimler and BMW being major contributors, as the virus progresses factories will close leaving workers who cannot transition to online work vulnerable, requiring substantial financial government support. The vulnerability of the car industry is a daunting prospect for Europe as it is consistently a major exporter: it forms 9.5% of France’s exports, 10.8% of the UK’s and 8.2% of Italy’s. A crippled car industry means bad news for workers, bosses and governments.
From here on out it is damage control for Europe. Authoritarian measures will be introduced to contain the spread of the virus whilst governments will do their best to limit the damage caused to workers and businesses.
Image: @kirtan via CreativeCommons