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What are the Financial Effects of the Coronavirus in Europe?

The coronavirus may have originated in China, but it has far-reaching effects as the virus spreads. If you study a COVID-19 tracker map, you will see the devastating effect the virus is having in Europe.

The stock markets in Italy, Spain, France, the UK, and Germany have all witnessed catastrophic levels of losses in recent weeks. As the number of people becoming infected rises, and more restrictions are put in place, the markets continue to suffer. Stocks in the European industries that rely on China as their main supplier has suffered some of the biggest losses.
Travel restrictions have impacted airlines and other transport sectors across the continent, with the greatest losses ever seen in peacetime. Italy reported the halt of production at some Fiat Chrysler plants due to the spread of the virus. It reported implementation of intensive sanitation procedures designed to safeguard their workers would reduce the output of vehicles for the foreseeable future.

The reduction of economic activity in Europe has also sharply affected credit card companies. However, this could be just the tip of the financial iceberg as the borders go up, and European supply chains begin to disintegrate.

Europe has already faced a slow GDP recently with trade disputes at the heart of their problems. The decision in 2016 for the United Kingdom to leave the EU was a major blow for the union. Following three long years of discussions, they finally agreed on a possible exit plan in 2019 and are due to finalize the process in December 2020. The whole process has already created a rift with the remaining members and the UK that could influence future talks following the coronavirus pandemic.

Although the war against the coronavirus is primarily medical, the effect on the financial sector cannot be ignored. European countries are on track to experience the worst recessions in generations. They understand the need to prop up their economies and the vast sums of money that will involve. Every single day matters and the situation is unique and overwhelming. This crisis cannot be cured by an economist with a financial package. It can only be contained by a complete lockdown across the continent with social distancing elements in place.

In this respect, each of the nations within Europe must become the insurer of the last resort. They must all implement plans that will cushion the blow and compensate individuals who are affected by the shutdown. They must do this swiftly and pass all-encompassing bills to make sure the level of suffering is reduced. Their people are already worrying about the virus and rising death rates. They need to be assured that the individual governments are going to take action needed to make sure the economy survives beyond these times of crisis.

The Healthcare Systems

The coronavirus is already threatening the capabilities of healthcare across the continent. Key workers in healthcare have to self-isolate for up to 14 days or longer if they have symptoms, and this is hindering the industry. The lack of testing kits available means that key workers are remaining at home when a simple test could give them a clean bill of health and allow them to return to work. As airlines and cruise ships are decommissioned, they present alternative opportunities. Cabin crew who are trained in first aid and already have security clearance are staffing makeshift hospitals across Europe. Here they can help with lower-level tasks and free the medical staff to care directly for patients. Cruise ships are being turned into temporary hospitals for infected patients.

Restrictions on travel and personal movement have now reached a lockdown status across Europe, but was it implemented quickly enough? Some people wonder if there should have been clearer instructions to the continent rather than allowing individual countries to implement their own timelines. Italy was the first to restrict flights from China, but it still became the epicenter of the virus. As Spain now emerges as the new epicenter, the effect on tourism must be considered.

Europe has regularly benefitted financially from Chinese tourists. Over 6 million of them have visited the area yearly and bring much-needed revenue. The Southern regions of Europe will now have to consider the losses to tourism following the spread of the virus. Spain could lose up to 20% of its GDP with the decline in tourism while Italy could lose 13%. The overall reduction in travel across Europe will hit all nations at varying rates. Beaches will be empty, hotels too. Coastal resorts face major disruption as the situation dictates restrictions may stay in place for over 6 months. This will decimate the whole summer season for Europe and cause widespread losses in the tourism industry.

Reintroducing border controls across the region will slow the transportation of workers as well as tourists across the world. Eastern European countries rely on large numbers of their population benefitting from migrant work in more affluent European countries. Their families live for the rest of the year on the wages generated by fruit picking and other labor-intensive jobs. Migrant farmworkers are being stopped on the borders and told to return to their homes.

The Effect on Easter and Religion

The world we used to know is rapidly becoming the world of yesterday. As Easter looms, most countries will be shutting down churches and telling worshippers to stay at home. Not so Bulgaria. This Eastern European country has issued a statement from the leaders of the Bulgarian Orthodox Church that all services will be held as normal. The services held at Easter attract crowds of worshipers to churches and sees them taking part in receiving the Eucharist and kissing holy icons. The bishop has issued an argument that some would say displays a level of faith that is admirable. He suggests that as the service is sacred, and the Holy Communion is protected by God that there is no risk of infection. This may seem laudable to some, but it does raise issues for people whose faith may not be as strong!

In the meantime, the Vatican has taken a stronger stance on public worship. They have asked that the elderly and infirm are kept away from churches, both Protestant and Catholic. The Mufti office has also restrained people from visiting mosques. In nearby Greece, all services and holy gatherings have been curtailed. Meanwhile, back in Bulgaria, the closest concession they have given is a release from obligation for worshippers.

So, as Easter approaches and Europe has time to consider the effect the virus will have on this traditionally profitable time of year, is it time to rely on higher beings to protect us? The answer is a resounding no! The BOC is putting its followers at risk. Attending church gatherings can only serve to spread the virus and infect vulnerable worshippers. An open letter signed by over 200 medical experts was submitted to the church leaders, asking them to support the secular community in keeping Bulgarians safe. It has been resoundingly ignored, and Easter celebrations will continue without sanctions.

Government Shake-Ups

In Kosovo, the situation soon became real for the incumbent government. Prime Minister Kurti was ousted by the country’s lawmakers citing their dissatisfaction with his handling of the crisis. Just months after taking office, the government collapsed. The President of Kosovo Hashim Thaci was at odds with Kurti about imposing a national emergency and how it could mend ties with their European neighbors.

The financial fallback of the collapse could prove devastating in the future. It has failed to gain international recognition following its independence from Serbia 12 years ago. The European friendly government was thought to be the way forward for the country, but nobody knows what will happen after the collapse. The response of outside forces has proved unusual. Germany and France spoke out against the no-confidence vote while the US supported the move. This has turned the Kosovo issue into a full-blown foreign policy battle between the EU and the US that can influence further negotiations.

How Has the Virus Affected the UK?

As Brexit fades into the distance, it is interesting to consider how the UK has responded to the virus. Led by Boris Johnson, the country has implemented a comprehensive package of measures to get the country through these troubling times.

The Chancellor, Rishi Sunak, has unveiled an economic bazooka that is commensurate to the situation. He has created a direct anti-coronavirus package of 32 billion pounds to complement his loan guarantee scheme that is worth over 300 billion pounds. He has proved to be a stable and reassuring head of the economy with a finger on the pulse of the nation’s needs. He has also guaranteed self-employed workers a package that will see them receive 80% of their projected income.

These bold moves have proved popular with the British public, and over 75% of them believe the government has reacted well to the crisis. They recognize that hard times lie ahead financially as the country is required to pay back the money behind these measures.

The rest of Europe will have to face similar times of recession as the world recovers from this pandemic. However, it is imperative there is a functioning economy to return to as normality returns. Therefore, it is essential to take any measures possible to keep the economy afloat.

Nationalism is the Most Worrying Side-Effect of Coronavirus

As the pandemic passes, the major barriers to international travel will be lifted. However, the longer the restrictions remain in place, the longer full restoration of global communication will suffer.
The world has been reminded just how fragile the global supply chains are. China has long been the market leader of supplies in Europe, and many industries found it difficult to thrive once links were shut. They have since found alternative sources of supply and may feel that rushing to reestablish those supply chains is a mistake. The virus has also reminded developed countries in Europe that many of their vital medical supplies are imported. They will be more inclined to produce their own medical supplies and avoid any further glitches in supply.

In times of emergency, people tend to fall back on the nation-state, and this can be seen clearly in Europe. The EU is meant to be the organization that leads the way in transcending the nation-state, but the reality is it seems to be every country is on their own. Not once have any of the European leaders mentioned the EU during their addresses to their nations? Borders that had disappeared have since reemerged. They may have been restored to curb the spread of the disease, but it is not certain that they will disappear as soon as the crisis has been diverted.
The EU has been criticized by prominent politicians for failing to unite Europe and deliver on its promise to solidify matters. They have left the individual governments to fend for themselves and deliver the financial packages that suit their economic needs. The future may see the EU produce some fiscal packages to convince the individual countries to rally together. Some would say the damage has been done. Brexit and coronavirus may prove to be the final nail in the European Union’s coffin.

Given the relative sizes of their respective budgets, the EU will feel little pressure from their European counterparts. The financial strain will inevitably fall on the governments of individual countries. As whole nations and not just an individual’s self-isolate, it becomes clear that the need to become self-sufficient is growing. The environmental movement has already stigmatized air travel on a global scale, but can the pandemic make us rethink globalization? Will we become a world full of individual countries who believe in self-preservation, or will we recognize the benefits of banding together? Only time will tell.

We may abhor the thought of individuals hoarding goods, but what will happen if whole nations begin to act in this way? As medical and financial resources become scarcer, we may just find out!

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