Europe is winding down its pandemic aid programs. Is it too soon?
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Version 0 of 1. After almost 18 months of relying on expensive emergency aid programs to support their economies through the pandemic, governments across Europe are scaling back some of these measures, counting on returning economic growth and the power of vaccines to carry the load from here. But the spread of the Delta variant of the coronavirus has thrown a new variable into that calculation, prompting concerns about whether this is the time for scheduled rollbacks in financial assistance. The tension can be seen in France, where the number of new virus cases has increased more than 200 percent from the average two weeks ago, prompting President Emmanuel Macron to try to push the French into getting vaccinated by threatening to make it harder to shop, dine or work if they don’t. At the same time, some pandemic aid in France — including generous state funding that prevented mass layoffs by subsidizing wages, and relief for some businesses struggling to pay their bills — is being reduced. A government panel recently urged “the greatest caution” about winding down emergency aid even further at the end of the summer. The eurozone economy has finally exited a double-dip recession, data last week showed, reversing the region’s worst downturn since World War II. European Union governments, which have spent nearly 2 trillion euros in pandemic aid and stimulus, have released nearly all businesses from lockdown restrictions, and the bloc is on target to fully vaccinate 70 percent of adults by autumn to help cement the rebound. But the obstacles to a full recovery in Europe remain large, prompting worries about terminating aid that has been extended repeatedly to limit unemployment and bankruptcies. “Governments have provided very generous support through the pandemic with positive results,” said Bert Colijn, a senior eurozone economist at ING. “Cutting the aid short too quickly could create an aftershock that would have negative economic effects after they’ve done so much.” In Britain, the government has halted grants for businesses reopening after Covid-19 lockdowns, and will end a special unemployment benefit top-up by October. At least half of the 19 countries that use the euro have already sharply curtailed pandemic aid, and governments from Spain to Sweden plan to phase out billions of euros’ worth of subsidies more aggressively in autumn and through the end of the year. Jack Ewing contributed reporting from Frankfurt, Eshe Nelson from London, and Léontine Gallois from Paris. |