Covid-19 to shrink every EU economy – some worse than others
October 13, 2020 - The effects of Covid-19 will shrink all European Union economies, with the impact most acute in tourism-dependent southern nations.
The uneven economic impact on the European Union of the effects of the coronavirus pandemic suggest a rocky recovery, with growth in the south weaker than in the north and east.
The economic crisis is having a greater impact in southern Europe because economies in warmer climes are more dependent on tourism and as such are particularly affected by Covid-19 lockdown measures.
Southern economies also have a larger concentration of small-to-medium-sized businesses related to tourism, travel and hospitality, which are less resilient to the financial strains of the crisis.
In contrast, northern and eastern countries are more dependent on manufacturing and industrial exports, where the impact has been more limited.
The economic north-south divide will complicate the European Central Bank’s wish to create a one-size-fits-all monetary policy for the euro currency, leading to additional market uncertainty.
As a result, the risk of social unrest and government collapses will also be higher in southern Europe, where the pandemic has inflamed residual economic woes brought about by the 2007-08 global financial crisis.