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2 June 2021
Europe COVID-19 tracker Free to View
Economics - Europe
Sunshine with scattered clouds
COVID-19 cases in the Big 4 are down 17% on last week and Elizabeth Martins
75% on their January 2021 peak … Senior Economist
HSBC Bank plc
... but rising case numbers in the UK make for some difficult
decisions – and not just in Westminster
Meanwhile, the spectre of inflation is looming larger
Better news (but UK delta blow)
The weather is getting better and so – touch wood – is the COVID-19 situation in
Europe. The number of new infections across the Big 4 has fallen 17% since last
week’s tracker (chart 1) and 75% compared with the January 2021 peak (on a 7-day
moving average basis).
Unfortunately, daily case numbers in the UK have picked up sharply (+67% since 5
May) as the Delta (or India) variant takes hold (chart 4). Hospital admittances were up
23% week-on-week on 25 May. At least the vaccine seems to be working with the rise
in new COVID-19 cases concentrated among the young and likely unvaccinated (chart
7). On 1 June, the UK celebrated its first full day with zero deaths from COVID-19
since the pandemic took hold. If the vaccine is doing its job, then serious cases
resulting in hospitalisation and death should be much lower in this wave, but given the
time lag involved, it is too early to say for sure that this is the case.
Difficult decisions for London (and elsewhere in Europe)
The spread in the UK is dividing opinions on whether the government should proceed
with the final stages of reopening and could complicate matters for countries hoping to
be put on the UK’s ‘green list’ of holiday destinations at the next announcement (on or
before 7 June). For Spain, the UK is a key source of tourists – accounting for a fifth of
all arrivals before the pandemic – and tourism revenues remain at only a fraction of
normal levels (chart 20). But some in Spain, Italy and Greece as well as other tourist
destinations may want to follow the example of France, which has erred on the side of
caution, demanding a PCR test and a mandatory 7-day self-isolation period for all
arrivals from across the Channel.
Elsewhere, the main economic news has been on inflation (charts 15 to 20) for which
the headline eurozone rate rose to a two and a half year-high of 2% y-o-y in April (with
the German and Spanish rates at 2.4%). The rise is largely energy driven, and with a
lot of prices still being imputed, it is hard to tell how much of the boost is genuine. We
suspect it is temporary. But the surveys suggest that for some firms, cost-push
pressures are very real however temporary they may prove.
Labour market data present a mixed picture (charts 21 to 26) with millions across
Europe still benefiting from government support schemes. What will happen when
these are withdrawn is a key question and one that the French government has
sought to address with its amended budget (2 June), which provides an additional
EUR15.5bn in funding to smooth out the impact of the gradual withdrawal of, among
other measures, government subsidies and the short-time working scheme.
This is an abridged version of a report by the same title published on 02-Jun-21. Please
contact your HSBC representative or email AskResearch@hsbc.com for more information.
Disclosures & Disclaimer Issuer of report: HSBC Bank plc
This report must be read with the disclosures and the analyst certifications in
the Disclosure appendix, and with the Disclaimer, which forms part of it. View HSBC Global Research at:
https://www.research.hsbc.comFree to View ● Economics - Europe
2 June 2021
The downward trends in infection and ICU numbers continues
1. New COVID-19 cases down 13% week-on-week for Big 4 plus UK (or 17% for Big 4 alone) …
COVID-19 cases* in the eurozone big 4 and UK
160000 160000
120000 120000
80000 80000
40000 40000
0 0
Jan Mar May Jul Sep Nov Jan Mar May
Germany France Italy Spain UK
Source: Refinitiv Datastream, HSBC. Notes: *7-day moving average. UK cases include a jump of almost 23,000 on Sunday, 4 October 2020, as a backlog of over 15,000
missing cases were added after an error in the tracking system came to light (Reuters, 4 October).
2. ... but a few countries are seeing renewed rises, including the UK, Ireland and Portugal
7dma Daily COVID-19 cases per 100k of population 7dma
30 30
25 25
20 20
15 15
10 10
5 5
0 0
Spain
Germany
Italy
Sweden
Netherlands
Greece
Ireland
Portugal
Belgium
UK
Norway
France
Switzerland
7-day to 25-May 7-day to 1-June
Source: Refinitiv Datastream, HSBC. Note: Weekend numbers are reported as 0, so “7-days to” does not include Saturday and Sunday.
3. Number of COVID-19 patients in 4. If vaccine does its job, then
intensive care units has continued to fall hospitalisations and deaths should be much
lower this time around
Total COVID-19 related ICU patients Total 7dma UK: COVID-19 7dma
8000 8000 6000 60000
7000 7000 5000 50000
6000 6000 4000 40000
5000 5000 3000 30000
4000 4000 2000 20000
3000 3000
1000 10000
2000 2000
0 0
1000 1000 Feb-20 Jun-20 Oct-20 Feb-21 Jun-21
0 0 Deaths (LHS)
Mar-20 Jun-20 Sep-20 Dec-20 Mar-21 Jun-21 Hospital admissions (LHS)
Cases (RHS)
Germany France Italy UK*
Source: Macrobond, HSBC. Note: *Medically ventilated Source: Our World in Data, HSBC. Note: *7dma
We acknowledge the assistance of Emily Wagenmann, HSBC Bank plc, in the preparation of this report.
2Free to View ● Economics - Europe
2 June 2021
The vaccination campaign keeps rolling in the EU
5. European countries are slowly catching up with the UK in terms of vaccines
Number Number of v accine doses administered per 100 people Number
120 120
100 100
80 80
60 60
40 40
20 20
0 0
Denmark (30 May)
Sweden (28 May)
Portugal (31 May)
Norway (30 May)
Greece (31 May)
Finland (31 May)
Italy (31 May)
Hungary (31 May)
Ireland (23 May)
France (30 May)
UK (30 May)
US (30 May)
Germany (30 May)
Poland (31 May)
Malta (30 May)
Bulgaria (31 May)
Iceland (28 May)
Spain (30 May)
Source: Our World in Data, HSBC
6. European countries are now ahead of the 7. Infections are highest and rising fastest in
UK in terms of daily vaccinations per million younger people, pointing to vaccine efficacy
Per 100k England: Rolling rate of COVID-19 Per 100k
Per mn Daily COVID-19 v accine doses Per mn cases by group
12000 12000 70 70
10000 10000 60 60
8000 8000 50 50
6000 6000 40 40
4000 4000 30 30
20 20
2000 2000
10 10
0 0
Dec-20 Feb-21 Apr-21 Jun-21 0 0
90+
05-09
10-14
15-19
20-24
25-29
30-34
35-39
40-44
45-49
50-54
55-59
60-64
65-69
70-74
75-79
80-84
85-89
Germany France Italy
Spain UK US
27/05/2021 01/05/2021
Source: Our World in Data, HSBC. Source: Our World in Data, HSBC
8. Delta variant1 is spreading across 9. ...and even faster in England
Europe…
% Europe ex . UK: COVID-19 variants % % Proportion of different COVID-19 v ariants %
in England
100 3.0 100 100
80 2.4 80 80
60 1.8 60 60
40 1.2 40 40
20 0.6 20 20
0 0.0
0 0
Oct-20 Dec-20 Feb-21 Apr-21 Jun-21
Alpha: B.1.1.7 (LHS) Beta: B.1.351 (RHS) Sep-20 Nov-20 Jan-21 Mar-21 May-21
Delta: B.1.617 (RHS) Alpha: B.1.1.7 (Kent) Delta: B.1.617.2 (India) Other
Source: GISAID, HSBC Source: The Spectator. Note: Data to 15 May
______________________________________
1 On 31 May 2021, the World Health Organisation launched a new system of naming new COVID-19 variants of concern by letters
of the Greek alphabet, rather than the geographic locations in which they were first identified, naming four (Alpha (formerly UK or
Kent), Beta (formerly South Africa), Gamma (formerly India) and Delta (formerly India)
3Free to View ● Economics - Europe
2 June 2021
A substantial vaccine rollout is under way
10. In the long run, vaccine supply is not an issue for Europe
EC
Organisation Dose Type of vaccine Reported effectiveness*
AstraZeneca/Oxford University Up to 400m Adenovirus 70.4%
BioNTech/Pfizer Up to 604m + 1.8bn** mRNA 95%
CureVac Up to 405m mRNA TBD
GSK/Sanofi Up to 300m Protein adjuvant TBD
Janssen/JNJ Up to 400m Adenovirus 66%
Moderna Up to 460m mRNA 95.6%
Germany
Organisation Dose Type of vaccine Reported effectiveness*
AstraZeneca/Oxford University 56m Adenovirus 70.4%
BioNTech/Pfizer 30m + 64m from EC = 94m mRNA 95%
CureVac 20m + 54m from EC mRNA -
GSK/Sanofi 55m Protein adjuvant TBD
Janssen/JNJ 37m Adenovirus 66%
Moderna 50m mRNA 95.6%
France
Organisation Dose Type of vaccine Reported effectiveness*
AstraZeneca/Oxford University Up to 60m from EC Adenovirus 70.4%
BioNTech/Pfizer Up to 91m from EC mRNA 95%
Moderna Up to 69m from EC mRNA 95.6%
CureVac Up to 45m from EC mRNA TBD
GSK/Sanofi Up to 24m from EC Protein adjuvant TBD
Janssen/JNJ Up to 35m from EC Adenovirus 66%
Italy
Organisation Dose Type of vaccine Reported effectiveness*
AstraZeneca/Oxford University 16m from EC Adenovirus 70.4%
BioNTech/Pfizer 40.5m from EC mRNA 95%
Various providers 70m - -
Spain
Organisation Dose Type of vaccine Reported effectiveness*
AstraZeneca/Oxford University 31.5m from EC Adenovirus 70.4%
BioNTech/Pfizer 20m + 94m** from EC mRNA 95%
Janssen/JNJ 20m Adenovirus 66%
UK
Organisation Dose Type of vaccine Reported effectiveness*
AstraZeneca/Oxford University 100m Adenovirus 70.4%
BioNTech/Pfizer 100m mRNA 95%
GSK/Sanofi 60m Protein adjuvant TBD
Janssen/JNJ 30m Adenovirus 66%
Moderna 17m mRNA 95.6%
Novavax 60m Protein adjuvant 89%
Valneva 60m Inactivated whole virus TBD
Source: AstraZeneca, BioNTech, CureVac, GSK, Janssen, Moderna, Novavax, IDT Biologika, Valneva, HSBC. Note: *Maximum reported. **Between end-2021 and 2023
4Free to View ● Economics - Europe
2 June 2021
Back on the move
11. The easing of restrictions measures is now increasingly evident across all countries
Index Gov ernment Response Stringency Score Index
100 100
80 80
60 60
40 40
20 20
0 0
Jan-20 Mar-20 May-20 Jul-20 Sep-20 Nov-20 Jan-21 Mar-21 May-21
Germany France Italy Spain
United Kingdom Norway Sweden Austria
Source: Oxford COVID-19 Government response Tracker, HSBC.
12. Mobility data show continued gradual normalisation, particularly in Scandinavia and
the UK
% from baseline Europe: mobility data - retail and recreation* % from baseline
20 20
0 0
-20 -20
-40 -40
-60 -60
-80 -80
-100 -100
Mar-20 May-20 Jul-20 Sep-20 Nov-20 Jan-21 Mar-21 May-21
Germany France Italy Spain UK Sweden Norway
Source: Google, HSBC. Note: *7-day moving average
13. UK households are out and about again – but journeys by public transport remain far
from normal levels
% v s. 2019 UK: Transport* % v s. 2019
120 120
100 100
80 80
60 60
40 40
20 20
0 0
Mar-20 May-20 Jul-20 Sep-20 Nov-20 Jan-21 Mar-21 May-21
Cars National rail TfL tube TfL Bus Bus (ex. London)
Source: GOV.UK, HSBC. Note: *7dma
5Free to View ● Economics - Europe
2 June 2021
Gearing up for relatively restriction-free summer
14. Latest on the restrictions from the major European countries
Country Latest lockdown measures
Germany On 22 March, the Chancellery and the Heads of Federal States agreed to extend the following lockdown restrictions:
Private meetings are limited to five persons (children up to 14 years are not counted) from two different
households in public and private places.
When using public transport or visiting shops, surgical masks or masks of the KN95 of FFP” standards must be
worn. An even stricter rule applies for employees and visitors of nursing homes, who have to wear FFP-2 masks
for at least as long as there is not a sufficient protection through vaccination.
Non-essential private domestic travelling should be generally avoided (but is not prohibited). Travellers from
abroad who enter Germany from a designated COVID-19 risk area need to register before entering and have to
quarantine for at least 10 days or provide a negative test result after five days at the earliest.
Entering Germany from a high-risk designated area additionally requires a negative test result.
On 21 April, the Bundestag amended the Infection Protection Act, including the so-called Emergency Break to unify
the measures to contain the spread of the virus at a national level. While these measures are similar to those set out
above, they also contain some further refinements, for example:
If the incidence level in a region exceeds 100 on three consecutive days, the additional measures specified in
the law including a nightly curfew from 10pm to 5am automatically apply from the day after next. The measures
came into force on 23 April and apply for as long as an epidemic emergency situation is officially declared, but
until 30 June 2021 at the latest.
Regarding schools, alternating instruction is mandatory starting at an incidence level of 100. If the incidence level
increases to 165, schools will have to close and remote learning will become mandatory (apart from some exceptions).
An obligation for businesses to provide remote working opportunities is now anchored in the Infection Protection
Act. Employers must offer employees the option for remote working wherever possible. This regulation is now
also applied regardless of the 7-day incidence level. If companies claim that remote working is not possible for
certain employees, they have to proof this in case of an investigation and are also required to at least test those
employees regularly (without any compensation for it by the government).
Above an incidence level of 150, retail stores (with the exception of stores for daily needs such as supermarkets) and
services (eg, zoos, museums etc.) will have to close. Between 100 and 150, visiting a retail store will still be possible
after booking an appointment in advance and under the precondition of presenting a negative COVID-19 test.
However, as of 2 June, only seven out of 401 districts in Germany were above the critical incidence threshold of 100.
Moreover, on 4 May the Bundestag passed a decree that basically exempts fully vaccinated people and recovered
COVID-19 patients from certain restriction measures, such as providing an obligatory test to use certain services and
lifting the general contact restrictions for them as well.
France The government has adopted additional restriction measures since the start of the year. A stricter curfew (starting on
6pm instead of 8pm) has been put in place at the national level since 16 January. France’s borders with countries
outside the EU have been closed since 31 January. Travel with French overseas territories is also banned, except
under exceptional circumstances. For people entering France from EU countries, a negative virus test is required.
Non-food shopping centres larger than 20,000 square meters have also closed since 31 January.
On 20 March, full-time local lockdowns were put in place in 19 departments (covering all the Paris region) for at least four
weeks. The restriction measures in confined departments include the closure of non-essential shops and services, limitations
of travel to within 10km from homes and a ban on interregional travel. In addition, remote working is strongly encouraged
wherever possible. At the national level, the curfew has been relaxed slightly, starting at 7pm instead of 6pm.
On 31 March, President Macron announced an extension of these rules to all metropolitan France from 3 April in the
evening. All interregional travel has been banned from 5 April. In addition, schools were closed for between three and
four weeks, including the already planned two-week-long spring holidays.
However, restrictions have started to be gradually eased. On 26 April, kindergartens and primary schools reopened. On 3
May, secondary and high schools reopened but only at half capacity for pupils aged above 13 years. All restrictions on
domestic travel (limitations within 10km from homes and a ban on interregional travel) were also lifted on 3 May.
On 19 May, non-essential shops, cultural places (museums, cinemas) and the outdoor part of bars and restaurants
partially reopened, but with restrictions on capacity: 50% for bars and restaurants (with a maximum of 6 per table),
35% for cinemas, theatres and stadiums and 8m2 per customer for shops and museums. Moreover, the curfew starts
now at 9pm instead of 7pm.
The next steps of the planned relaxation process are:
9 June: Reopening of gyms and of the indoor part of bars and restaurants. Rules on remote working would be
eased. The curfew would start at 11pm instead of 9pm.
30 June: End of the national curfew and of existing capacity limits. May be possible to attend an event of more
than 1,000 people with a COVID-19 health pass.
This calendar remains subject to the evolution of the pandemic and could be adapted to the situation in each region.
6Free to View ● Economics - Europe
2 June 2021
14. Latest on the restrictions from the major European countries
Country Latest lockdown measures
Italy Since November 2020, Italian regions have been split into three categories – ‘red’, ‘amber’ and ‘yellow’ – depending
on several criteria related to COVID-19. The classification is updated on a weekly basis. From 15 January, a ‘white’
category was also introduced with very limited restrictions. In the ‘red’ and ‘orange’ regions, secondary schools are
closed, restaurants are shut all day and mobility is restricted to essential reasons (work, health). On top of that, in the
‘red’ regions, all non-essential shops and services (eg, hairdressers) are shut as well as schools from 11 years of age
(13 years in the ‘orange’). As of 2 June, there are no regions in the 'red' or 'orange' category, most of the country is
'yellow', and, for the first time since last November, three regions (Sardegna, Molise, Friuli) accounting for 5% of the
population are now 'white' with no restrictions. Based on current data more should follow next week.
In the latest COVID-19 decree approved on 18 May, the government has laid out a timeline for lifting restrictions at
the national level for the 'yellow' regions (these do not apply to 'white' regions). Outdoor restaurants, cinemas and
theatres and museums have already been allowed to reopen (in the case of restaurants, both for lunch and dinner).
From 22 May, shopping centres were also opened on weekends and ski resorts were allowed to re-open (although
the ski season is basically over). From 24 May. gyms were allowed to reopen. and from 1 June, indoor restaurants.
From 15 June, it will be the time of theme parks and museums, and from 1 July, indoor swimming pools, sport halls,
trade exhibitions and congresses. Home visits to relatives and friends remain permitted once a day, up to a maximum
of four people (in addition to the residents). From 19 May, the curfew has been delayed from 10pm to 11pm (still until
5am). It will then be delayed further from 12pm from 7 June and will be abolished altogether on 21 June. Primary
schools have now been reopened everywhere (up to 13 years of age) while high school attendance is set at between
50% and 100%. As for international travel, until 31 July, people arriving from the EU, the UK and Israel no longer
have to quarantine, but they will be required to show a negative COVID-19 test undertaken within 48 hours before
departure.
Spain The Spanish Health Ministry has identified four levels of alert for the regions based on a series of indicators related to
COVID-19 infection rates. As of 2 June, for the first time, no region has an 'extreme' risk, and four regions have a 'high'
risk level (including the Madrid region). Pressures on the hospital system have eased with ICU occupancy rates from
COVID-19 patients having dropped below 15% for the first time since September and from over 40% reached at the peak
of the third wave of the pandemic earlier in the year even though it remains elevated in some regions (c35% in the Madrid
region).
On 9 May, the state of emergency expired and was not extended by the government. With that, the nationwide curfew
also came to an end although four regions still have it in some form (Canarias, Navarra, Comunidad Valenciana and
Baleares). The freedom to travel across regions has been re-established with no regions maintaining the external border
closure in place (even though regions are still imposing travel restrictions in and out from specific areas within the
regions). Some restrictions, though, remain in place at the regional level. For example, in the Madrid region, bars and
restaurants have to shut at 1am and there remain limitations in terms of capacity (50% indoor and 75% outdoors). In
Catalonia, cinemas and theatres can remain open until 11pm with capacity restrictions (70%). In the Basque Country,
bars and restaurants have to close at 10pm. Spain has also reopened its external frontier. For entry, a negative COVID-
19 test is required.
UK On 4 January, Prime Minister Boris Johnson announced a national lockdown for England, including the closure of all schools.
On 22 February, he laid out a new four-step framework for lifting the lockdown. On the first of the milestones he laid out, 8
March, schools reopened and permission to meet one other member of another household outdoors for recreation was added
(previously such meetings were only allowed for exercise). On 29 March, there was a further relaxation in outdoor restrictions,
allowing outdoor gatherings of up to six people. The second step, implemented on 12 April, saw hairdressers and gyms
reopen, and pub and restaurants were allowed to serve customers outdoors (including selling alcohol without food). The third,
on 17 May, saw indoor food and drink service, museums, theatres and sports stadia reopened.
However, the fourth (no earlier than 21 June), which would see the government aim to “remove all legal limits on
social contact”, including opening nightclubs, is in some doubt, given the rising case numbers and risks from the
increased instances of the Indian variant of the virus.
For the rest of the UK, plans for further lifting of restrictions vary by country. For most of Scotland, hairdressers and
some retailers reopened on 5 April and outdoor hospitality and gyms on 26 April with an indoor alcohol ban lifted and
cinemas reopened on 17 May. In Wales, indoor hospitality also resumed on 17 May. In Northern Ireland, hairdressers
have been able to reopen since 23 April and non-essential retail and outdoor hospitality since 30 April while indoor
service resumed on 24 May.
International leisure travel has no longer been illegal since 17 May with regulations on testing and quarantine
requirements guided by a traffic light system with lighter restrictions for amber and green listed countries, depending
on their levels of COVID-19 infection rates and variants present (UK Government, 12 May 2021). Inbound arrivals will
be subject to the same rules. However, Portugal is the only EU country currently on the green list, which is expected
to be updated on or before 7 June.
Entry into the UK from a ‘red list’ of 40 countries, including South Africa, Brazil and India, remains banned to non-UK
or Irish nationals. As of 15 February, for those who cannot be refused entry from these countries – ie, returning
British or Irish nationals – a mandatory 10-day quarantine in government-approved accommodation applies.
Source: Country data, HSBC
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2 June 2021
Inflation creeping up
15. Eurozone inflation reached a two and a 16. … with German and Spanish inflation
half year high of 2% y-o-y in April… rising to 2.4% y-o-y
% Yr Eurozone inflation % Yr % Year HICP % Year
3 3 4 4
3 3
2 2
2 2
1 1 1 1
0 0
0 0
-1 -1
-1 -1 -2 -2
2010 2012 2014 2016 2018 2020 2010 2012 2014 2016 2018 2020
Headline HICP Core HICP Germany France Italy Spain
Source: Refinitiv Datastream, HSBC. Source: Refinitiv Datastream, HSBC.
17. Moves may be transitory, but surveys 18. In the UK, house prices are rising fast
suggest that there could be more to come too
Index Eurozone and UK Manufacturing PMIs Index % Yr UK: Nationw ide house prices % Yr
90 90 12 12
80 80 9 9
70 70
6 6
60 60
3 3
50 50
40 40 0 0
Jan-20 Apr-20 Jul-20 Oct-20 Jan-21 Apr-21
EZ - input prices EZ - output pric es -3 -3
UK - input prices UK - output prices 2010 2012 2014 2016 2018 2020
Source: Refinitiv Datastream, HSBC. Source: Refinitiv Datastream, HSBC.
19. Despite higher inflation, consumer 20… even if German households remain a
confidence is rising in the eurozone... little more cautious
Index Eurozone: Consumer confidence Index Germany : GfK consumer clim ate Index
0 0 80 80
-5 -5 60 60
40 40
-10 -10
20 20
-15 -15
0 0
-20 -20
-20 -20
-25 -25 2018 2019 2020 2021
2018 2019 2020 2021 Income expectations Willingness to buy
Source: Refinitiv Datastream, HSBC. Source: Macrobond, HSBC.
8Free to View ● Economics - Europe
2 June 2021
Labour markets also starting to recover
21. Unemployment fell in Germany in May 22. … and usage of short-time work
… scheme is receding
000s Germany : Unemployment (s.a.) 000s Mn Germany : Short-time work Mn
400 400 9.0 9.0
Millions
7.5 7.5
300 300
6.0 6.0
200 200 4.5 4.5
100 100 3.0 3.0
1.5 1.5
0 0
0.0 0.0
2008 2010 2012 2014 2016 2018 2020
-100 -100 Announcements
2016 2017 2018 2019 2020 2021 ST workers liable for cyclical ST working allowance
Source: Bloomberg HSBC. Source: Macrobond, HSBC.
23. Italian unemployment jumped in April, 24. ...and number of hours used under
but partly due to rise in participation... short-time work scheme fell significantly
% Italy inactiv ity and unemployment rates % Mn hrs Italy : Short-time w ork schemes Mn hrs
39 14 800 800
700 700
38 12
600 600
37 10 500 500
400 400
36 8 300 300
200 200
35 6 100 100
0 0
34 4
Aug
Sep
Apr
Apr
Mar
May
Jun
Nov
Dec
Jan
Mar
Feb
Oct
Jul
2006 2008 2010 2012 2014 2016 2018 2020 2022
Inactivity (LHS) Unemployment rate (RHS) Industry Other
Source: Refinitiv Datastream HSBC. Source: Italian Social Security Institute, HSBC.
25. Spanish tourism revenues are still 26. Return of tourists should help absorb
fraction of normal levels remaining short-time workers
EURbn Spending by foreign tourists (cumulative) EURbn Mn Spain: Short-time work schemes Mn
100 100 3.5 3.5
Millions
3.0 3.0
80 80
2.5 2.5
60 60 2.0 2.0
40 40 1.5 1.5
1.0 1.0
20 20
0.5 0.5
0 0 0.0 0.0
Aug
Sep
Apr
May
Nov
Dec
Feb
Mar
Jan
Jun
Oct
Jul
Nov
Dec
Oct
Jun
Jul
Jan
Apr
Aug
Apr
Sep
May
Mar
May
Feb
2019 2020 2021 Restaurants, Accommodation Other
Source: INE, HSBC. Source: Spain Ministry of Labour, HSBC.
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2 June 2021
COVID-19 in Western Europe
27. New COVID-19 cases have fallen sharply 28. ... and France has seen clear drop
in Germany ... recently
000s Germany : COVID-19 cases 000s 000s France: COVID-19 cases 000s
4000 32 6000 90
Thousands
Thousands
Thousands
Thousands
5000 75
3000 24
4000 60
2000 16 3000 45
2000 30
1000 8
1000 15
0 0 0 0
Jan Apr Jul Oct Jan Apr Jan Apr Jul Oct Jan Apr
New Cases (RHS) Cumulative (LHS) New Cases (RHS) Cumulative (LHS)
Source: Refinitiv Datastream, HSBC. Source: Refinitiv Datastream, HSBC.
29. In Italy, new cases are still coming down 30. ... while Spain now seems clearly past
despite restrictions having been eased ... fourth wave of the pandemic
000s Italy : COVID-19 cases 000s 000s Spain: COVID-19 cases 000s
5000 45 4000 100
Thousands
Thousands
Thousands
Thousands
4000 36
3000 75
3000 27
2000 50
2000 18
1000 25
1000 9
0 0 0 0
Jan Apr Jul Oct Jan Apr
Jan Apr Jul Oct Jan Apr New Cases (RHS) Cumulative (LHS)
New Cases (RHS) Cumulative (LHS)
Source: Refinitiv Datastream, HSBC. Source: Refinitiv Datastream, HSBC.
31. In the UK, absolute numbers remain low, 32. ... while Switzerland is still coping with
but they are rising fast … tail-end of latest wave
000s UK: COVID-19 cases 000s 000s Sw itzerland: COVID-19 cases 000s
5000 90 800 24
Thousands
Thousands
Thousands
Thousands
4000 72
600 18
3000 54
400 12
2000 36
200 6
1000 18
0 0 0 0
Jan Apr Jul Oct Jan Apr Jan Apr Jul Oct Jan Apr
New Cases (RHS) Cumulative (LHS) New Cases (RHS) Cumulative (LHS)
Source: Refinitiv Datastream, HSBC. Source: Refinitiv Datastream, HSBC.
10Free to View ● Economics - Europe
2 June 2021
33. New COVID-19 cases have been xx 34. Norway has flattened infection curve
steadily declining in the Netherlands and but there have been some daily spikes
Belgium
000s Netherlands/Belgium: COVID-19 cases 000s 000s Norw ay: COVID-19 cases 000s
Thousands 2000 30 140 3.5
Thousands
Thousands
Thousands
1600 24 120 3.0
100 2.5
1200 18
80 2.0
800 12 60 1.5
400 6 40 1.0
20 0.5
0 0
Jan Apr Jul Oct Jan Apr 0 0.0
NL - New Cases (RHS) BE - New Cases (RHS) Jan Apr Jul Oct Jan Apr
NL - Cumula tive (LHS) BE - Cumulative (LHS) New Cases (RHS) Cumulative (LHS)
Source: Refinitiv Datastream, HSBC. Source: Refinitiv Datastream, HSBC.
35. In Sweden. new COVID-19 cases have 36. ...while Ireland has clearly left behind
been declining but at a slow pace third wave, seeing low levels of new cases
000s Sw eden: COVID-19 cases 000s 000s Ireland: COVID-19 cases 000s
1200 12 300 9.0
Thousands
Thousands
Thousands
Thousands
250 7.5
900 9
200 6.0
600 6 150 4.5
100 3.0
300 3
50 1.5
0 0 0 0.0
Jan Apr Jul Oct Jan Apr Jan Apr Jul Oct Jan Apr
New Cases (RHS) Cumulative (LHS) New Cases (RHS) Cumulative (LHS)
Source: Refinitiv Datastream, HSBC. Source: Refinitiv Datastream, HSBC.
37. Pandemic appears to have been 38. New cases in Greece are also starting to
successfully contained in Portugal come down
000s Portugal: COVID-19 cases 000s Greece: COVID-19 cases
000s 000s
900 18 450 5.0
Thousands
Thousands
Thousands
Thousands
750 15
360 4.0
600 12
270 3.0
450 9
180 2.0
300 6
90 1.0
150 3
0 0 0 0.0
Jan Apr Jul Oct Jan Apr
Jan Apr Jul Oct Jan Apr New Cases (RHS) Cumulative (LHS)
New Cases (RHS) Cumulative (LHS)
Source: Refinitiv Datastream, HSBC. Source: Refinitiv Datastream, HSBC.
11Free to View ● Economics - Europe
2 June 2021
Fiscal measures (in the Big 4 eurozone countries and the UK)
39. Fiscal policy was highly supportive of growth last year even if significant chunk of
support did not make it into the economy due to restrictions and was actually saved
% GDP Decomposition of deficit changes in 2020 % GDP
14 14
12 12
10 10
8 8
6 6
4 4
2 2
0 0
-2 -2
Eurozone Germany France Italy Spain* UK*
Discretionary One-offs Economic cycle Fiscal impulse Deficit change
Source: HSBC calculations based on national statistical institutes, Eurostat and European Commission, 2020 budgets and amendments. Notes: * Refers to fiscal year 2020/21.
The ‘Economic Cycle’ component for eurozone countries and the Big 4 includes the ‘normal’ short-time work compensation schemes but not the extensions and more generous
terms agreed in response to the COVID-19 crisis. For the UK, it includes the Job Retention Scheme (JRS).
40. After the latest significant upward revisions of this year's deficit targets by most
eurozone countries, fiscal policy could be even more supportive of growth this year
% GDP Decomposition of deficit changes in 2021 % GDP
5 5
4 4
3 3
2 2
1 1
0 0
-1 -1
-2 -2
-3 -3
-4 -4
-5 -5
Eurozone Germany France Italy Spain UK*
Discretionary Economic cycle NGEU 'grants' 2020 One-offs expiring Fiscal impulse Deficit change
Source: HSBC calculations based on national statistical institutes, Eurostat and European Commission, 2020 budgets and amendments. Notes: * Refers to fiscal year 2020/21.
The ‘Economic Cycle’ component for eurozone countries and the Big 4 includes the ‘normal’ short-time work compensation schemes but not the extensions and more generous
terms agreed in response to the COVID-19 crisis. For the UK, it includes the Job Retention Scheme (JRS).
41. Fiscal policy should remain expansive in 2022 thanks to Next Generation EU fund,
while European Commission has announced EU fiscal rules will remain suspended
Output gap Eurozone: Fiscal policy stance and output gap Output gap
2 2019 2
2018 Fiscal expansion
1 1
2017
0 0
2011
-1 2016 2022* -1
-2 2012 2014 -2
2015
-3 -3
-4 2013 2021* -4
-5 2020 -5
Fiscal tightening
-6 -6
-7 -7
-1.5 -1.0 -0.5 0.0 0.5 1.0 1.5 2.0 2.5 3.0
Source: HSBC calculations based on national statistical institutes, Eurostat and European Commission, 2020 budgets and amendments. Note: The adjusted series takes into
account that due to ongoing restrictions at least part of the stimulus implemented last year and this year did not actually feed through into the economy but will only do so once
restrictions are lifted.
12Free to View ● Economics - Europe
2 June 2021
Disclosure appendix
Analyst Certification
The following analyst(s), economist(s), or strategist(s) who is(are) primarily responsible for this report, including any analyst(s)
whose name(s) appear(s) as author of an individual section or sections of the report and any analyst(s) named as the covering
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views or forecasts expressed herein, including any views expressed on the back page of the research report, accurately reflect
their personal view(s) and that no part of their compensation was, is or will be directly or indirectly related to the specific
recommendation(s) or views contained in this research report: Elizabeth Martins
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13Free to View ● Economics - Europe
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