2G or not 2G? That is the question

Good evening,

Worrying data on increasing case rates of infections, hospitalisations and deaths across Europe have provoked a range of measures to reduce the spread of Covid-19 this week.

The tightening of restrictions, particularly on those who have declined immunisation or proffering evidence of immunity from transmitting the disease, has reopened ugly fissures between proponents of personal responsibility and critics of communal coercion.

Austria’s government confirmed today that it plans to make vaccination against coronavirus mandatory for all citizens from early next year, making it the first European country to do so. Chancellor Alexander Schallenberg said that it was time “to face reality” as he announced a new three-week lockdown for all Austrians.

But between the rights or wrongs of political debates over a growing wave of tightening measures across Europe, the increasing strains on health services and squeeze on economic activities in the lead up to the festive season remind us that for many this Christmas will not be a much hoped for return to pre-pandemic Yuletide normality.

Dr Hans Kluge, WHO regional director for Europe, warned yesterday that the continent faced “a hard winter ahead” despite the success of vaccination programmes in allowing the easing of preventive measures and unlocking of economies over the year.

“But far too many remain unvaccinated, so we have pockets in which the virus continues to spread and cause strain on local and national health systems,” he told the BBC.

His remarks came just a day after departing German chancellor Angela Merkel warned that a fourth wave of Covid-19 was “hitting our country with full force”, as health agencies announced a record daily case rate of over 65,000.

Much of Germany and Austria are now covered by variations of so-called 2G restrictions — a reference to German words geimpft and geneses for vaccinated and recovered — that preclude significant minorities of unvaccinated people from non-essential shops and social events. Dutch MPs also debated the move this week.

Similar restrictions on leisure activities, encouragement of homeworking and enforcement of “Covid passports” for entry to events have been rolled out elsewhere in recent days, including in Ireland, Slovakia and the Czech Republic.

Chart showing that Covid-19 cases and deaths are rising fast in much of Europe, prompting governments to reintroduce restrictions

Vaccine passports enjoy substantial support across Europe, according to a YouGov survey published today in the Guardian.

The survey, which covers 10 countries, suggests there is majority backing for mandatory vaccine passes to access large events as well as support in most territories for them to be required in cafés, restaurants and gyms.

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Latest news

Need to know: the economy

Plans for extensions to stimulus packages to help underpin stuttering recovery for leading economies were the order of the week.

US legislators today voted through Joe Biden’s $1.75tn Build Back Better bill, designed to make sweeping investments in early childhood education, public healthcare for pensioners and programmes to combat climate change, after a filibustering speech by a leading Republican delayed approval yesterday night.

The wrangle comes just days after Biden signed his flagship $1.2tn infrastructure bill into law after gaining bipartisan support. This bill contains $550bn in new spending on roads, bridges, tunnels, airports, broadband and other infrastructure improvements.

In Japan, new prime minister Fumio Kishida unveiled a ¥43.7tn ($383bn) stimulus package today. It includes generous cash handouts for households and help for struggling businesses and is designed to prop up the country’s faltering recovery from the pandemic.

Japan has already spent ¥88tn in fiscal stimulus, or nearly 17 per cent of gross domestic product, since the start of the Covid-19 outbreak in 2020.

Latest for the UK and Europe

An early surge in shopping ahead of Christmas helped British retail sales return to growth last month after nearly half a year of contraction.

Figures released by the UK’s Office for National Statistics today show the volume of monthly retail sales in Great Britain grew 0.8 per cent between September and October.

Growth was helped by clothing stores, which recorded their highest sales since the start of the pandemic.

Line chart of Great Britain, volume index, 2018=100 showing Retail sales returned to growth

However, public borrowing in the UK fell less than expected in October, reflecting higher interest payments on public debt and the cost of the Covid-19 vaccination programme even as tax receipts increased thanks to stronger economic activity.

The ONS estimated public sector net borrowing was £18.8bn last month, compared with a forecast of £13.8bn culled from a poll of economists by Reuters.

Column chart of % of GDP, fiscal years showing UK public debt has reached levels last seen in the 1960s

Meanwhile, Christine Lagarde, president of the European Central Bank, warned against an overhasty squeeze on monetary policy across the eurozone today.

Speaking to a Frankfurt banking conference, she said: “We must not rush into a premature tightening when faced with passing or supply-driven inflation shocks.”

Her remarks put further pressure on the euro exchange rate against other major currencies, fuelling expectations of a growing interest rate gap between the eurozone and other major economies.

Line chart of $ per € showing Euro slides on bets for widening gulf in global monetary policy

However, the prospect of ECB policy staying accommodative for longer, boosted by news of the fresh German and Austrian restrictions, prompted a rally in eurozone government bonds.

Global latest

America’s largest retailers are weathering the country’s supply chain storm, while smaller rivals struggle to secure sufficient supplies, according to the latest wave of earnings announcements.

The surging recovery in demand since last year’s Covid-19 lockdowns has strained all importers, write the FT’s Andrew Edgecliffe-Johnson and Obey Manayiti. Rocketing ocean freight costs, port logjams and shortages of materials, truckers and warehouse space have led to unprecedented supply chain challenges.

But it is smaller, poorer countries that are being hit hardest by bottlenecks caused by the bounceback in global trading activity, writes Harry Dempsey.

The UN has warned that elevated shipping costs resulting from the global supply chain crunch would further fuel inflation around the world and disproportionately hit developing nations’ economies.

The pandemic-induced boom in demand for goods, combined with supply chain disruptions, have caused freight rates to rocket to record highs, reaching about five times their average over the past decade.

Developing nations bear the brunt of higher shipping costs; simulated impact of freight rate surge on price levels (%)

Science round-up

Pandemic control: The British may fetishise their National Health Service and the Americans their healthcare innovations and star doctors, but when seen through the lens of coronavirus, other countries — from Taiwan to Norway — have served their citizens’ health better.

Zoologists fear wildlife could become a reservoir of infection that could be transmitted to people. Two studies showing high levels of Covid-19 infection among wild deer in the US have renewed concerns about the virus spreading through animal populations.

Map showing Covid-19 outbreaks in animals

Genetic engineering research has made some fear the next pandemic could be lab-made.

Vaccines: Pfizer is seeking regulatory authorisation in the US for its Covid-19 antiviral pill, which has been shown to cut the risk of hospitalisation and death in adults by nearly 90 per cent in late-stage studies.

Sandy Douglas, one of the scientists behind the Oxford/AstraZeneca Covid-19 vaccine has defended a decision to make profits on new supply deals this week, as the partnership announced that more than 2bn doses had been delivered.

Treatments: The FT’s video team has had a look inside UK hospitals to assess the strain Covid-19 has been placing on the health system.

Covid cases and vaccinations

Get the latest worldwide picture with our vaccine tracker

And finally…

© Cat O’Neil

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