Europe could face a double-dip recession as governments reimpose coronavirus lockdown measures, ING economist Carsten Brzeski has warned.

“It increasingly looks like a double dip,” said Brzeski, chief economist in Germany for Dutch bank ING. “The surge in the third quarter has been driven by the lifting of the lockdown measures. There won’t be any additional lifting, rather the opposite. Therefore stagnation and possibly even a double dip is possible.”

READ: Fund managers finally believe the market rally is real

A second wave of coronavirus means that Europe’s economic recovery over the summer could be fragile. UK prime minister Boris Johnson unveiled nationwide restrictions such as a 10pm curfew for pubs and restaurants this week and threatened further measures if the spread of the virus is not arrested.

European capitals such as Madrid and Dublin have re-entered lockdowns in recent days as the virus rears its head again.

Brzeski said a second round of national lockdowns would be disastrous for the European economy.

READ: A ‘Nike swoosh’ recovery or a V-shaped rebound? City views on the UK’s prospects

“This is why governments will do whatever they can to stick to local lockdowns, as already witnessed in recent days,” he said.

Glimmers of hope on the horizon include potential approval of a coronavirus vaccine, the resurgence of China’s economy and strong levels of fiscal stimulus from EU governments.

To contact the author of this story with feedback or news, email James Booth



Source link

LEAVE A REPLY

Please enter your comment!
Please enter your name here