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Euro zone GDP contracts amid tight covid restrictions, vaccine rollout

A restaurant closed during lockdown on Mitropoleos street next to Monastiraki square in Athens, Greece, on Monday, Nov. 9, 2020.

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LONDON — The euro zone economy dropped by 0.7% in the final quarter of 2020 as governments stepped up social restrictions to contain a second wave of Covid-19 infections, Europe’s statistics office said on Tuesday.

A preliminary reading points to an annual GDP contraction of 6.8% for the euro area in 2020, Eurostat said.

The region had experienced a growth rate of 12.4% in the third quarter as low infection rates at the time had allowed governments to partially reopen their economies.

However, the health emergency deteriorated in the last three months of 2020, with Germany and France going as far as reintroducing national lockdowns. The tightening of the social restrictions weighed on the economic performance once again.

Data released last week showed that Germany grew 0.1% in the final quarter of 2020. Spain experienced a GDP growth rate of 0.4% in the same period while France contracted by 1.3%. The numbers came in above analysts’ expectations and suggested that some businesses had learnt how to cope as best as possible with lockdowns.

Nonetheless, the three-month period also coincided with news of the first coronavirus vaccine approvals, which renewed optimism that the pandemic could come to an end sooner than expected. However, the rollout has since then been slow and bumpy, with economists fearing it will delay the much-needed economic recovery.

“The fiasco of Europe’s vaccination plan and Brussels’ retreat from its standoff with the U.K. and AstraZeneca have raised doubts about a European recovery, confirmed the worst caricatures of bungling bureaucracy and revived fears that the European Union could break apart,” Anatole Kaletsky, founder of Gakeval Research said in a note on Tuesday morning.

In addition to the uneven distribution of Covid-19 jabs, the number of daily cases has also increased in the new year amid the spread of new variants of the virus. Governments have thus decided to extend or reintroduce lockdowns to contain the spread.

In this context, the International Monetary Fund has lowered its growth expectations for the euro area in 2021. The Fund last week cut its growth forecast for the region by 1 percentage point to 4.2% this year. Germany, France, Italy and Spain — the four largest economies in the euro zone — all saw their growth expectations slashed for 2021. 

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Italy’s Prime Minister Giuseppe Conte quits amid political crisis

Italian Prime Minister Giuseppe Conte holds a press conference on July 7, 2020 in Rome, Italy.

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LONDON — Italy is facing more political turmoil after Prime Minister Giuseppe Conte resigned on Tuesday, at a time when the country faces a severe health and economic crisis.

Italy has been embroiled in political uncertainty over the past three weeks after a small party, Italia Viva, decided to exit the coalition government led by Conte. The rupture in the executive came after a dispute over EU pandemic recovery funds, and how they are disbursed, which has plunged the nation into instability.

Earlier on Tuesday, Conte, who has no political affiliation, told his ministers that he is resigning. He then handed in his official resignation to President Sergio Mattarella. The president has reportedly asked Conte to remain in a caretaker role while consultations take place over the formation of a new government.

However, the resignation is seen as an attempt to avoid a parliamentary defeat at a Senate vote later this week.

He narrowly survived a vote of confidence last week, but his government has been stripped off a working majority with the departure of Italia Viva — making it difficult to pass any major laws for the remainder of his mandate.

“Having failed in his desperate efforts to broaden his majority, Conte and his government were set to be defeated in a new Senate vote that is currently scheduled for 27 January,” Wolfango Piccoli, co-president of the consultancy firm Teneo, said in a note.

He said Conte’s resignation was an attempt “to ensure his own political survival.”

Italy’s President Sergio Mattarella will have to decide whether to give Conte the chance to negotiate with lawmakers again, looking for a majority that will allow him to govern.

“Conte’s calculation is that by moving early, and thereby avoiding a humiliating defeat in the Senate later this week, he would increase his chances of securing a mandate from Mattarella to form a new government,” Piccoli said, while warning that “it is currently unclear whether Conte can succeed in such an effort.”

If Italian lawmakers do not reach an agreement over a new coalition government, with or without Conte as prime minister, then voters might have to head to the polls sooner rather than later.

“The bottom line is that Italy will continue to be governed by an executive that is not apt for the tough job ahead, just like it has been the case since the last election,” Piccoli said.

This is a breaking news story and it is being updated.

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London wedding with 150 guests broken up by police over lockdown violations

A wedding in London that violated the U.K. lockdown was broken up by police on Thursday night, officials said. 

At first, the Metropolitan Police said that 400 people attended the wedding, but the force later revised the number to 150. 

Currently, a maximum of six guests are allowed to attend weddings and civil partnership ceremonies, according to the U.K. coronavirus lockdown guidance. However, those ceremonies should only happen “in exceptional circumstances,” such as if one partner has a terminal illness. 

Police said they were called to the London neighborhood of Stamford Hill on Thursday night with reports of a large gathering at a school. 

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“The group had gathered for a wedding and had taken a number of steps to mask their activity, covering up windows and closing gates,” Metropolitan Police said in a release. 

The Yesodey Hatorah Secondary Girls School in the Stamford Hill neighborhood of London is pictured. Police said that they broke up a wedding attended by 150 people despite a nationwide lockdown at the school Thursday night. (Stefan Rousseau/PA via AP, File)

According to police, the wedding organizer is facing a £10,000 (about $13,685 USD) fine and five other attendees have been given £200 (about $274 USD) “fixed penalty notices.”

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The venue was the Yesodey Hatorah Senior Girls’ School, a state-funded Orthodox Jewish high school, whose principal died from the coronavirus in April last year.

In a statement, the school said it was “absolutely horrified about last night’s event and condemn(s) it in the strongest possible terms.”

The school said its hall had been leased to an outside organization and “we had no knowledge that the wedding was taking place.”

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U.K. Chief Rabbi Ephraim Mirvis also condemned the rule-breaking event.

“At a time when we are all making such great sacrifices, it amounts to a brazen abrogation of the responsibility to protect life and such illegal behaviour is abhorred by the overwhelming majority of the Jewish community,” he tweeted Friday.

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Pubs, restaurants and entertainment venues in Britain are closed, and people are required to stay largely at home, as part of restrictions to curb a new surge in the virus. The U.K. has recorded more than 95,000 COVID-19 deaths, the highest toll in Europe.

The Associated Press contributed to this report.



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