Europe: what coronavirus restrictions are currently in place?
Governments throughout Europe are currently enforcing draconian lockdown measures and restrictions to contain and prevent the spread of COVID-19. As the number of cases and fatalities vary amongst European countries, central governments are adopting differing approaches in how they approach the lifting of lockdown restrictions.
In the UK, the British government’s current lack of transparency around its lockdown exit strategy is undermining support for pound Sterling (GBP), as markets are no clearer on when Britain’s economy can be kick-started.
However, amid the uncertainty and lockdown continuing, UK Prime Minister, Boris Johnson, is set to reveal a roadmap out of lockdown on 22nd February.
Last year it was announced that small and medium-sized organisations (SME’s) were entitled to 100% taxpayer-backed loans following concerns surrounding the existing coronavirus rescue schemes and the general lack of lending from the UK retail banks.
The scheme is known as a Coronavirus Bounce Back loan, loans of up to GBP 50,000 are available to SME’s, with minimal form-filling required. With no repayments due during the first year, the UK government has committed to paying the interest on the loans for the first 12 months and will be working with lenders to offer a low rate of interest for any remaining period of the loan. Loan terms will be up to 6 years.
The extended government scheme was introduced to help SME’s, which collectively employ three-fifths of the UK’s workforce and contribute to approximately 50 percent of the UK’s private sector turnover. In offering this financial assistance, the UK government has recognised the significant role and contribution SME firms across the UK provide in supporting the national economy and how important they will be in its post coronavirus recovery.
The more financial support the government offers businesses across the UK, the more confidence currency markets will have in the government’s ability to navigate the British economy to a brighter future. This is likely to reflect positively on the value of the British pound (GBP).
Rishi Sunak stated; “We are prepared to put in place a set of measures that will help refine those social and economic restrictions to help us get our lives back to normal as quickly as practically possible while maintaining protection for the NHS.”
Most of Spain under tight restrictions
Spain was one of the worst impacted Eurozone countries by coronavirus, with a current total of 3.11 million cases and 66,316 deaths. Though rates of infections have been significantly decreasing since the start of February, the majority of Spain is subject to tight restrictions to help reduce infection rates even further.
Currently, ten out of seventeen regions in Spain have closed bars and restaurants, which has had a devastating impact on the hospitality sector, with over 290,000 workers on furlough.
Back in October Spain declared a national state of emergency and imposed a nationwide curfew. Spain’s Prime Minister, Pedro Sánchez, stated that the curfew would take place between 11 pm and 6 am and is said to continue until early May 2021.
France closes borders and introduces curfew
France closed its borders to all non-EU countries from 31st January, which now includes the UK. Total coronavirus cases in France are currently 3.51 million and 83,112 deaths, with 7-day average cases currently 18,361.
Similarly to Spain, France had also imposed a curfew, which was introduced last December. Originally the curfew was active between 8 pm to 6 am. However, a revised curfew was introduced on 16th January, with businesses ordered to close and everyone home by 6 pm.
Whilst schools remain open during this time, with testing in place, bars and restaurants across France are currently closed.
Italy opens bars and restaurants
Italy has also been significantly impacted by coronavirus, particularly during the start of the pandemic. There have been a total of 2.75 million coronavirus cases in Italy, along with 94,540 deaths.
A nationwide curfew has also been introduced in Italy, between the hours of 10 pm – 5 am. The country also requires everyone to wear masks both indoors and outdoors.
Bars and restaurants, however, are now open in 15 out of 20 regions in Italy but service must end by 6 pm.
High school students in Italy have been permitted to return to classrooms, though classes have been divided into small groups.
GBP/EUR currency outlook
Although the UK and most of Europe remain under tight coronavirus restrictions, the British pound (GBP) has been advancing against the euro (EUR) over recent weeks. Yesterday the British pound to euro (GBP/EUR) exchange rate reached its highest level in nine months at EUR 1.15.
The British pound (GBP) is largely underpinned by the UK’s rapid vaccination rollout, with over 15 million people now having received the first dose of the vaccine and over 500,000 on their second dose. In comparison, the EU, who have been notoriously slow with their vaccine programme, has currently only administered the first dose to 5% of its population.
It is hoped that pound Sterling (GBP) could receive a further boost on Monday when Boris Johnson reveals plans on how the UK will exit its national lockdown, giving an indication of when parts of the UK economy can reopen.