Europe Prepares for Slow Return to Business as Virus Passes Peak

(Bloomberg) -- Europe, which has recorded more than 100,000 deaths from the coronavirus outbreak, is preparing for a gradual return to business, although leaders remain nervous about a resurgence.

Italy will start easing its two-month lockdown on Monday, while Germany is reopening playgrounds, zoos, museums and churches. In the U.K., Prime Minister Boris Johnson said the country has now passed the peak of the outbreak and pledged a “comprehensive plan” to lift the lockdown. France is gearing up for a gradual easing of restrictions starting May 11.

“We have achieved a lot in the last few weeks,” but as long as there’s no vaccine or treatment, “it’s imperative to be cautious,” Chancellor Angela Merkel said on Thursday, after meeting with the heads of Germany’s 16 states. Bigger moves to ease the country’s lockdown will be evaluated at a gathering on May 6, when policy makers will have more reliable data on the impact of measures that started on April 20.

Europe is keen to end the confinement that has resulted in the euro-area economy plunging into a record contraction. Output in the 19-country euro area shrank 3.8% in the first quarter, reflecting shutdowns to contain the coronavirus that have pushed businesses close to collapse, sent unemployment surging and forced governments to unleash billions of euros in emergency stimulus.

Still, the fear of a second wave of infections that could be even more damaging is driving governments to proceed with caution.

Wary Merkel

With nearly 160,000 cases in Germany -- the fourth-highest in Europe -- Merkel is wary of easing controls that helped slow the pandemic. That’s even as economic worries have intensified, with the country on Thursday reporting a record 373,000 surge in jobless claims in April, despite widespread state wage support designed to stem mass layoffs.

Italy on Thursday saw the number of recoveries from the virus hit a record high. That comes as Prime Minister Giuseppe Conte prepares to start easing the country’s lockdown from the beginning of May.

Construction and manufacturing will resume next week, while retailers and museums will reopen on May 18 and bars and restaurants in June. Schools will remain closed until September.

To mitigate the impact on the economy, Conte approved an initial 25-billion euro ($27.4 billion) package of measures last month and plans to fund another stimulus package for the economy worth 55 billion euros.

Johnson’s Pledge

Meanwhile, in the U.K., in his first press conference since recovering from Covid-19, Johnson promised to set out details next week on how businesses can get back to work, suggesting that people will be encouraged to wear face masks as the restrictions are lifted.

Official figures released on Thursday showed the total number of deaths in the U.K. rising to 26,711.

Johnson has been facing calls to spell out a strategy to exit the strict lockdown measures he ordered on March 23, amid concerns that millions of people are facing the loss of their jobs and companies are collapsing. Ministers are due to review the restrictions -- unprecedented in peacetime -- on May 7.

Johnson said it will be crucial to ensure any lifting of the curbs does not lead to a second spike in virus cases that overwhelms the National Health Service. But the economy “will bounce back strongly,” he predicted.

A Marathon

Deaths in France rose at the slowest pace in four days on Thursday, reaching 24,376, as the country prepares for a cautious reopening with large swathes of businesses -- including cafes, restaurants and theaters -- likely to remain shuttered for a while.

Portugal, too, is moving toward a gradual easing of restrictions, with small stores to reopen from Monday. Shops in malls and the largest stores will have to wait until June 1 to reopen, Prime Minister Antonio Costa said on Thursday. The government will continue to assess data on the outbreak and if needed “take a step back” in its plan to ease restrictions every two weeks, he said.

As the region cautiously prepares for this new chapter, the premier of Bavaria in Germany, Markus Soeder, summed up the thinking of policy makers.

“It’s a marathon,” he said, as he stood beside Merkel. “We don’t know how long it will last.”

©2020 Bloomberg L.P.

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