The extension of lockdowns has dashed hopes of an early rebound in economic activity. Instead, the economy is likely to contract in the first quarter of this year. After falling quite steeply at the end of last year, the number of new virus cases in the euro-zone has begun to rise again, and the number of daily deaths remains close to its peak during the first wave. The trajectory is particularly worrying in Germany. Meanwhile, the explosive increase in virus cases in the UK suggests that the epidemic could become much more virulent in Europe in the coming weeks. Still, we remain cautiously optimistic that the vaccine rollout will allow governments to lift restrictions gradually during the second quarter of this year, paving the way for a more sustainable recovery in the second half.
Become a client to read more
This is premium content that requires an active Capital Economics subscription to view.
Already have an account?
You may already have access to this premium content as part of a paid subscription.
Sign in to read the content in full or get details of how you can access it
Register for free
Sign up for a free account to gain:
- Unlock additional content
- Register for Capital Economics events
- Receive email updates and economist-curated newsletters
- Request a free trial of our services