Merkel, Macron Seek Solutions in Europes Coronavirus Battle

Chancellor Angela Merkel will consult with regional German leaders and French President Emmanuel Macron is due to appear on national television as Europes leaders labor to contain the alarming increase in coronavirus cases.

Like their counterparts across the continent, Merkel and Macron are striving to avoid reimposing the broad restrictions that brought economic activity to a near-standstill in the second quarter, pushing instead for localized constraints targeted at virus hotspots.

Merkel, who has stopped short of ruling out a second lockdown, will host state premiers at the chancellery in Berlin Wednesday to discuss how best to coordinate measures for the Europe Unions biggest economy. These include curbs on social gatherings and domestic hotel use, fines for citizens failing to respect distancing and hygiene rules and compulsory mask-wearing.

Virus Spread

Covid-19 cases per 100,000 people over the past 14 days

Source: European Centre for Disease Prevention and Control

After putting six cities including Paris on maximum alert, Macron may announce additional restrictions for the EUs second-largest economy.

“I‘m watching with great concern the climbing infection numbers, actually in almost every part of Europe,” Merkel said Tuesday. “We cannot squander what we’ve achieved in the last few months.”

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Europes virus cases began a resurgence in the late summer, fueled by social gatherings and vacation travelers. New cases in Germany jumped to 6,541 on Tuesday, close to the levels seen during the peak in the spring, though they fell back again to 4,464 in the 24 hours through Wednesday morning, according to data from Johns Hopkins University.

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France‘s seven-day rolling average of new infections rose Tuesday for an 11th day to 17,387, the highest it’s been since the start of the outbreak.

Europe as a whole recorded almost 700,000 new cases last week, the most since the pandemic began, and taking the total to just below 7 million, the World Health Organization said Tuesday in its latest situation report. Britain, France, Russia and Spain accounted for over half of all new cases, the report said.

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While relatively low hospitalization and death rates have fueled resistance to harsher restrictions, governments in many nations with surging virus numbers have been left with no choice but to tighten localized curbs. There’s little evidence so far that the piecemeal approach is working.

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U.K. Prime Minister Boris Johnson is facing growing pressure to order a national “circuit breaker” lockdown, after the opposition Labour Party and government scientists more is needed to get Covid-19 under control.

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Slow Recovery

Economic activity in Germany, France, Spain and Italy has leveled off

Source: Bloomberg Economics, Google, Moovitapp.com, German Statistical Office, BloombergNEF, Indeed.com, Shoppertrak.com, Opportunity Insights

Note: Jan. 8 = 100

Dutch Prime Minister Mark Rutte announced Tuesday what he called a “partial lockdown,” with sales of alcohol to be banned after 8 p.m. and bars, restaurants and coffee shops shuttered.

In Germany, a survey suggested Tuesday that investors are concerned that resurgent infections could hurt the recovery, while the Bundesbank warned that the nations financial system should prepare for increasing strains as a result of company failures and rising indebtedness.

To help mitigate the impact of the pandemic, Merkels ruling coalition plans to extend bridging aid for German companies until June 30, 2021, Funke Mediengruppe reported Wednesday, citing unidentified people close to the Economy Ministry.

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What Bloombergs Economists Say...

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“After the recovery gained traction in the latter half of September, economic activity has again weakened in the second week of October, particularly in European countries and Canada. Following concerns about renewed outbreaks amid strong rises in Covid-19 cases, activity in Germany, France, Spain and Italy has leveled off.”

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--Björn van Roye and Tom Orlik. Read the full INSIGHT

— With assistance by Mariajose Vera, and Zoe Schneeweiss