Research Briefing | Jul 23, 2021

Eurozone | Delta variant becomes key downside risk to the outlook

Ipad Frame - Delta variant becomes key downside risk to the outlook

We expect the more transmissible Delta coronavirus variant will have a much lower impact on European economies than previous waves, although some will be more affected than others. Vaccines have significantly weakened the link between cases and hospitalisations, reducing the likelihood of lockdowns.
What you will learn:

  • The re-imposition of restrictions or voluntary changes in behaviour could pose risks to the economy. The tourism sector faces the most immediate impact – indeed, several governments have already tightened restrictions on travel and hospitality.
  • While leading indicators continue to suggest this summer will be significantly better than in 2020, a sharp rise in hospitalisations would impact our growth forecasts, especially in Southern Europe.
  • We expect the response by governments to the surge in cases will be different this time and aimed more at limiting the economic damage. Governments are putting their faith in the protection vaccines afford, and attention is now turning to concerns over public finances.
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