Investors were relieved to see the green shoots of recovery in the EU economy. However, their optimism seems to be fading. Sluggish mass vaccination in 27 countries inside the EU is to blame for a slowdown in the economic output, international insurance company Euler Hermes pinpoints the reason.
Meanwhile, Europe is lagging behind the US and the UK in the vaccination campaign. These countries have already provided 9.4% and 14.4% of the population accordingly with the first jabs of the coronavirus vaccine. At the same time, 5% of the Europeans have received the first dose. If the EU does not push ahead with mass vaccination, the population immunity could be nothing but empty words until the end of the next year. Besides, if the EU health authorities fail to contain the infection, the economy of the euro block will run a grave risk of getting trapped in dire straits. Insurance experts warn that the EU economy could incur huge losses of at least €90 billion this year that is 2% of GDP, unless European countries speed up a pace of the mass vaccination.
Interestingly, the budget spending on vaccine purchases is 4 times as low as the hypothetical amount of losses. In other words, €1 spent on vaccination could yield €4. Experts mean that a full-fledged re-opening of the EU economy will generate profits provided that the services and manufacturing sectors ramp up production rates back to their normal capacity. Indeed, those countries which vaccinate their population in full can be confident in robust consumer activity and a sharp inflow of investments in the second half of 2021.
In the meantime, the US and China are outrunning the European economy in the pace of economic recovery. The efforts to revitalize the EU economy have failed due to second lockdowns in several advanced countries.