COVID-19: EU threatens to block vaccine exports to the UK

• EU threatens to block vaccine exports to countries in a move to highlight “reciprocity”
• European leaders divided over the AstraZeneca vaccine
• Coronavirus vaccination issues in the EU could delay the EU’s vaccine passport plan
• Bank of England’s (BoE) policy decision will determine the direction of the British pound to euro (GBP/EUR) exchange rate

European Commission President Ursula von der Leyen threatened to block vaccine exports to the UK, the US and other countries with more progressive coronavirus vaccination programmes unless they see reciprocity in exports to the bloc.

It comes as several countries across the EU report a surge in daily COVID-19 cases, including Eurozone’s largest economies, France and Germany who are considering extending lockdown restrictions.

The EU has been the laggard in the vaccine race, and von der Leyen has faced heavy criticism over the bloc’s handling of the coronavirus vaccination programme.

According to the European Centre for Disease Prevention and Control’s (ECDP) COVID Vaccine Tracker, only 8.5% of the EU population has been vaccinated compared to the US, which has inoculated 12% of the nation and Britain at 37%.

The latest UK government statistics show that nearly 25 million people have received their first dose of a COVID vaccine, boosting confidence towards the economic recovery outlook.

With the EU facing a third wave of COVID-19, less than 10% of its population protected against the virus and member states preparing to impose stricter restrictions, the euro area’s recovery outlook is darkening.

On Wednesday, President von der Leyen said: “We are in the crisis of the century, and if the situation does not improve, we may have to block jab exports to countries that have higher vaccination rates than us.”

Her comments come as six EU member states protest against vaccine supply issues, which has been an ongoing problem for the best part of the last four months.

Ms von der Leyen said vaccine deliveries between the US and the EU had been smooth sailing. However, she launched an attack on Britain, demanding the UK hand over agreed doses of the AstraZeneca vaccine or see exports from the continent halted.

AstraZeneca row between the EU and UK continues

European Commission President Ursula von der Leyen lashed out at AstraZeneca for “under-producing and under-delivering” vaccine doses to the bloc, blaming the pharmaceutical firm for Europe’s laggard rollout.

She demanded the UK export jabs to the EU or have vaccine exports from the bloc cut off. British Prime Minister Boris Johnson and Joint Committee on Vaccination and Immunisation (JCVI) member Jeremy Brown have warned this move will cost more lives.

Her comments come even though more than a dozen EU countries, including the bloc’s largest economy, Germany, have implemented an Astra ban amid fears that the Oxford-AstraZeneca vaccine causes blood clots.

The latest move means that approximately 7.5 million AstraZeneca vaccines will be in limbo until the European Medicines Agency’s (EMA) completes its investigation into whether the jab is linked to blood clots.

The EU regulator and AstraZeneca have maintained that the benefits of the jab outweigh the risks, but more than 13 European countries have suspended the vaccine.

A poll conducted in Germany also found that most respondents believe the government was right to impose the Astra ban pending an investigation. A formal response from the regulator is expected to be delivered on Thursday.

However, with COVID cases surging across the EU, the vaccine suspension and slow rollout of the current supply is threatening to delay the bloc’s vaccine passport plans and could set back May half-term holidays.

Britons half-term holiday plans to the EU at risk of collapsing

Britons who had looked forward to holidaying in the EU when the UK’s travel ban lifts on May 17th could be left disappointed as the EU’s third COVID wave and laggard vaccine rollout has raised concerns over safe travel to the bloc.

The vaccine fiasco could also mean that the European Commission’s vaccination passport plans that would allow people to travel more freely across the bloc could be delayed.

The news has delivered a significant blow to European countries that depend on tourism to boost their economy and for Britons who had been keen to travel to the EU for half-term holidays.

According to several tour operator and airlines, Britons planning trips abroad have been pushing back bookings to the summer holidays amid mounting concerns over the EU’s COVID-19 situation and sluggish vaccination programme.

Airlines are also offering UK holidaymakers the opportunity to reschedule their bookings for free due to growing uncertainty. Many travel and tourism businesses have also reported a steady uptick in summer holiday bookings to the EU and expect strong UK demand to Mediterranean destinations this year despite the darkening situation in the Eurozone.

If  Boris Johnson’s lockdown exit roadmap goes according to plan, the UK will free of coronavirus restrictions on June 21st.

Low-cost airline, Jet2 is confident that travel from the UK will resume from May 17th and told resort bosses in Majorca to prepare for a “massive arrival” of British tourists from June.

Although the target date for when travel can restart is May 17th, tourism chiefs believe most Britons are waiting until July or August to travel abroad.

The UK’s rapid vaccine rollout and the declining infection rate have also boosted hopes of a robust economic rebound in Q2 2021. Many economists expect pent-up demand will unleash a consumer spending boom into the second half of the year.

Meanwhile, the vaccination suspension in the EU and Eurozone’s difficulty to contain the pandemic has raised expectations for further monetary easing from the European Central Bank (ECB), weighing on the euro’s (EUR) outlook.

British pound to euro (GBP/EUR) forecast for further gains

Today’s Eurozone inflation data did little to help euro (EUR) exchange rates, primarily due to the fact the CPI fell in line with consensus forecasts and remain unchanged at 0.9% year-on-year,

According to Eurostat, Eurozone inflation held steady as it was supported by more expensive services last month. However, ING economists point out that all EU domestics point to a return to lacklustre inflation once the pandemic subsides.

Although the British pound to euro (GBP/EUR) exchange rate is trading 0.2% lower at EUR 1.1657, this could be due to some “pre-MPC” volatility, says Kit Juckes, Global Head of FX Strategy at Société Générale.

While the Brexit battle remains a concern for GBP traders, tomorrow’s Bank of England (BoE) policy decision is expected to drive GBP/EUR to some of its best levels this year as financial markets anticipate a relatively hawkish statement from the central bank.

Meanwhile, continued weakness in the Eurozone outlook could exert some near-term pressure on the euro to pound Sterling (EUR/GBP) cross, especially if the bloc’s vaccine situation continues to deteriorate.

However, tomorrow’s session will also see the European Central Bank (ECB) President Christine Lagarde deliver a statement. If the ECB President strikes an optimistic tone on the EU’s recovery outlook, EUR could find fresh momentum.

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