Eurozone prepares to win recovery race as stricter Covid rules hamper UK

Germany and England may not resume their football rivalry until next week, but economic protests have already begun in Frankfurt.

The Bundesbank’s latest monthly assessment claims the UK economy, Europe’s largest economy, will regain ground lost to Covid after a “strong rebound” months before “early this summer”.

Confidence in German companies, based on a monthly index of 9,000 companies by the Ifo Institute, has been the sharpest since 2018, as companies “cut out” from the crisis. Confidence in French trade continued to grow, reaching its highest level since 2007.

Activity in the eurozone is growing at the fastest rate in 15 years, according to the latest activity metrics from financial data firm IHS Markit.

The influx of positive data from the continent comes amid the lifting of restrictions in protest against growing frustrations on this side of the channel. A four-week delay in UK Independence Day has forced troubled sectors such as hospitality to wait even longer, despite the success of Britain’s rapid vaccine rollout.

Take French Cafe & Bar, for example, which is fully open from June 9. Or French clubs that can return to their seats from 1 July. Meanwhile, Germany will leave for home on June 30, about three weeks before Britain.

In addition, EU citizens will be able to travel freely across the region from early July, potentially giving relief to ailing Club Med economies that are struggling after a year of travel restrictions.

“Tourism will do very well and will certainly work for them,” says Chris Williamson, chief economist at IHS Markit. But with exceptions such as Spain or Portugal, British nationals are largely under lockdown. Till then, the passengers should be quarantined after their return.

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Indicators are ripe for a summer boom on the continent, says Andrew Cunningham, European chief economist at Capital Economics, who calls it a “catch-up moment in Europe”.

He says, “The thing is unique [Europe] It resumes, it’s incredibly fast because it toggles switches on and off – it’s not like running out of any other kind of Slack. May and June will be very good months for Eurozone GDP.

In contrast, the UK has already enjoyed a re-opening, as shown by declining activity data from IHS Markit as well as faster real-time indicators from the Office for National Statistics.

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