National lockdowns return to Europe as COVID-19 numbers soar

October 22, 2020, 10:43 AM UTC

Ireland and Czechia have become the first European countries to reenter national lockdown, as the second wave of the coronavirus pandemic begins to pummel the continent and small businesses stare bankruptcy in the face.

As of Thursday, people in Ireland have been urged to stay at home as much as possible for the next six weeks, venturing out to exercise only within a three-mile radius of their homes. Nonessential shops have to close, and restaurants and cafés can only be open for takeout and deliveries.

The Irish at least had a heads-up of a few days. The Czech lockdown was announced Wednesday: Until Nov. 3 at the earliest, nonessential shops must close, and “the free movement of persons throughout the Czech Republic is prohibited.”

Czech Prime Minister Andrej Babiš apologized for the measures, which he acknowledged “will make life uncomfortable for businesses, employees, and our citizens.” He also apologized for having previously ruled out the possibility of a second lockdown “because I couldn’t imagine it happening.”

The rationale is clear. Czechia, also formally known as the Czech Republic, got off very lightly in the pandemic’s spring wave, with no more than several hundred daily cases at the time. On Wednesday, it recorded just shy of 15,000 new cases, and a daily death toll of 120; the worst day in the first wave saw just 18 losses.

Job losses

Ireland’s situation is different; so far, the second wave has been far less deadly than the first (with a peak daily death toll of 13 as compared with 214) but case numbers are mostly higher this time round, and there is a definite upward trend.

“We’re making a preemptive strike against the virus, acting before it’s too late,” said Deputy Prime Minister Leo Varadkar on Monday, when the fresh lockdown was announced.

And nobody is trying to hide the economic fallout. Varadkar said around 150,000 people in Ireland would likely lose their jobs this week as a result of the new lockdown, which will cost the government around 1.5 billion euros ($1.8 billion). Ireland’s central bank chief, Gabriel Makhlouf, also said this week that the country is anticipating an economic “double whammy” from the coronavirus and the probable failure of the EU and the U.K. to agree a post-Brexit trade deal.

Across Europe, 55% of small- and medium-size businesses (SMEs) expect to go bust within the next year if their revenues do not improve, the consultancy McKinsey warned Thursday.

McKinsey surveyed over 2,200 SMEs in France, Germany, Italy, Spain, and the U.K., and found 70% had lost revenues as a result of the pandemic, with Italian and Spanish firms being particularly badly hit. An average 14% of SMEs were having trouble staffing their operations, owing to workers being off sick or under quarantine. Just over a tenth expect to file for bankruptcy within six months.

Record number

Ireland and Czechia may be instituting the first national second-wave lockdowns in Europe, but other countries such as Italy, France, and the U.K. have brought in regional measures to tackle hotspots.

On Wednesday, 20 European countries—with the U.K., Italy, and Czechia topping the list—reported record infection numbers.

The arrival of the second wave has helped to depress markets in recent days, along with other factors such as the looming U.S. election and uncertainty over the viability of a new U.S. pandemic stimulus deal.

Also on Thursday, the airline giant IAG—owner of British Airways, Iberia, and Vueling—scaled back its schedules for the fourth quarter by around 25%. Having already lost 1 billion euros in the last quarter, it said demand was lower than it had hoped for.

“Recent overall bookings have not developed as previously expected due to additional measures implemented by many European governments in response to a second wave of COVID-19 infections, including an increase in local lockdowns and extension of quarantine requirements to travelers from an increasing number of countries,” said CFO Stephen Gunning in a statement.

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