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21 July 2021
Europe COVID-19 tracker Free to View
Economics - Europe
Rising worries on the Delta wave
Cases are rising rapidly in many European countries with a
reproduction rate even higher than in previous waves Chantana Sam
Economist
Pressure on hospitals remains low thanks to vaccinations, but HSBC Continental Europe
recent signs of slowing vaccine rollout are a source of concern
Renewed local restrictions in some countries and early signs
of impact on bookings point to risks on the tourism recovery
Europe is now firmly in the grip of a new COVID-19 wave
There have been no signs of relief on the front of infection rates over the past week. New
cases have continued to accelerate sharply in many countries, in particular in the UK,
Spain and the Netherlands (charts 1 and 2). In other countries like France and Italy, case
numbers are firmly on the rise, even if they remain low. But the effective reproduction rate
has jumped to an even higher level than for previous waves, confirming that the Delta
variant is more contagious than other virus strains (chart 3). This suggests that in terms of
case numbers, the current wave has the potential to be stronger than previous ones.
Vaccination is a key difference, but uncertainties remain
On a more positive note, hospital admissions have remained low, even if they have
edged up a bit in the UK (chart 4). The decoupling between cases and hospitalisation
numbers reflects the positive role played by vaccination as infections have been
concentrated among young people. This situation explains why the UK government went
ahead with the end of all legal limits on social activity in England on 19 July.
However, a non-negligible share of the European population is still not vaccinated,
including some of the most vulnerable people. Therefore, the risk of renewed pressure on
hospital capacity cannot be ruled out. With the pace of vaccination generally slowing in
Europe (chart 7), some countries could be willing to follow the example of France, which
is set to buck the trend. Indeed, measures taken last week to incentivise vaccination
(mandatory vaccination for health care workers and wider use of the COVID-19 health
pass to access some venues) have led to a sharp rise in appointments (chart 8).
Studies pointing to waning vaccine protection over time (chart 9) are also a source of
concern as they suggest that vaccine boosters could be needed.
Rising downside risks on economic activity
The current COVID-19 wave could derail the tourism recovery that was firmly underway
until recently (charts 16 and 17). Indeed, in some popular destination countries, new
restrictions have been imposed locally, like a 1-6am curfew in Catalonia and in the island
of Mykonos. In Italy, the Italian tourism association reported a 50% drop in bookings (both
in Italy and abroad) last week, relative to the previous one (La Repubblica, 18 July).
Countries less dependent on foreign tourists should fare better, but economic activity
could still be impacted by the current wave. For example, in the UK, polls suggest that
people are not comfortable to return to some venues in spite of the end of legal
restrictions (Chart 14). The recent rise in the number of people forced to self-isolate
(Chart 13) and of children absent of schools for COVID-19 reasons (14% on 15 July,
according to government figures) should also be a drag on the recovery in the near term.
This is an abridged version of a report of the same title published on 21 July 2021. Please
contact your HSBC representative or email AskResearch@hsbc.com for more information.
Disclosures & Disclaimer Issuer of report: HSBC Continental Europe
This report must be read with the disclosures and the analyst certifications in
the Disclosure appendix, and with the Disclaimer, which forms part of it. View HSBC Global Research at:
https://www.research.hsbc.comFree to View ● Economics - Europe
21 July 2021
Cases are still rising rapidly, but hospitalisation rates remain low
1. Case numbers are firmly on the rise in Europe…
COVID-19 cases* in the eurozone big 4 and UK
160000 160000
120000 120000
80000 80000
40000 40000
0 0
Jan Mar May Jul Sep Nov Jan Mar May Jul
Germany France Italy Spain UK
Source: Refinitiv Datastream, HSBC. Notes: *7-day moving average.
2. …in particular in Spain, the UK and the Netherlands
7dma Daily COVID-19 cases per 100k of population 7dma
75 75
60 60
45 45
30 30
15 15
0 0
Spain
Italy
Germany
Sweden
Portugal
Netherlands
Greece
Ireland
UK
Belgium
France
Norway
Switzerland
7-day to 14-July 7-day to 21-July
Source: Refinitiv Datastream, HSBC. Note: Weekend numbers are reported as 0, so “7-days to” does not include Saturday and Sunday.
3. The effective reproduction rate has been 4. Hospitalisation admissions remain low
significantly higher in the current wave but they are starting to rise again in the UK
7-day av erage COVID-19 effectiv e 7-day av erage Total COVID-19 related ICU patients Total
reproduction rate 8000 8000
4 4
6000 6000
3 3
4000 4000
2 2
2000 2000
1 1
0 0
0 0 Mar-20 Jun-20 Sep-20 Dec-20 Mar-21 Jun-21
Mar-20 Jun-20 Sep-20 Dec-20 Mar-21 Jun-21 Germany France Italy UK*
UK Netherlands Spain
Italy France
Source: Our World in Data, HSBC Source: Macrobond, HSBC. *Medically ventilated
We acknowledge the assistance of Yash Dewan, HSBC Bank plc, in the preparation of this report.
2Free to View ● Economics - Europe
21 July 2021
Still a tight race between vaccination and the Delta variant
5. Excluding Malta, the UK is still ahead of EU countries in terms of vaccine progress
Number Number of v accine doses administered per 100 people Number
180 180
150 150
120 120
90 90
60 60
30 30
0 0
Germany (19 Jul)
Bulgaria (19 Jul)
Spain (19 Jul)
UK (18 Jul)
Romania (19 Jul)
US (19 Jul)
France (19 Jul)
Portugal (19 Jul)
Poland (19 Jul)
Denmark (19 Jul)
Malta (19 Jul)
Ireland (19 Jul)
Sweden (16 Jul)
Norway (19 Jul)
Finland (19 Jul)
Greece (19 Jul)
Source: Our World in Data, HSBC
6. Most of largest eurozone countries have 7. ...even if outside France and Italy, the
caught up with the US… pace of vaccination is clearly decelerating
Number Number of v accine doses Number Per mn Daily COVID-19 v accine doses Per mn
administered for 100 people 14000 14000
120 120
12000 12000
100 100
10000 10000
80 80 8000 8000
60 60 6000 6000
40 40 4000 4000
2000 2000
20 20
0 0
0 0 Dec-20 Feb-21 Apr-21 Jun-21
Jan-21 Mar-21 May-21 Jul-21 Germany France Italy
Germany France Italy Spain UK US
Spain US
Source: Bloomberg, HSBC Source: Our World in Data, HSBC
8.The measures announced in France to 9. Waning antibody protection over time is a
boost vaccination have been effective source of uncertainty in the reopening phase
000s France: vaccine appointments booked 000s Unit per mn Ev olution of S-antibody levels Unit per mn
online on Doctolib for a first dose (median) after 2nd v accine dose
1,400 1400 8000 8000
Thousands
Thousands
1,200 1200 7000 7000
1,000 1000 6000 6000
5000 5000
800 800
4000 4000
600 600 3000 3000
400 400 2000 2000
200 200 1000 1000
0 0
0 0
21-41 days 42-55 days 56-69 days 70+ days
May-21 Jun-21 Jul-21
Appointments Pfizer/BioNTech AstraZeneca
Source: Doctolib, HSBC Source: Shroti et al., Spike-antibody waning after second dose of BNT162b2 or
NB: Doctolib is one of the main platforms to book a vaccine appointment in France ChAdOx1, The Lancet, July 15, 2021
3Free to View ● Economics - Europe
21 July 2021
The recovery in activity has lost its momentum
10. Social activity is now rising more slowly in Europe
% from baseline Europe and US: mobility data - retail and recreation* % from baseline
20 20
0 0
-20 -20
-40 -40
-60 -60
-80 -80
-100 -100
Mar-20 May-20 Jul-20 Sep-20 Nov-20 Jan-21 Mar-21 May-21 Jul-21
Germany France Italy Spain
UK Sweden Norway US
Source: Google, HSBC. Note: *7-day moving average
11. Restrictions in the eurozone are no 12. …while in England, most of legal limits
longer being eased… on social activity ended on 19 July
Index Eurozone: stringency of restrictions Dev iation Index UK: stringency of restrictions Dev iation
and mobility * from baseline and mobility * from baseline
0 40 0 20
20 20 20 0
40 0 40 -20
60 -20 60 -40
80 -40 80 -60
100 -60 100 -80
Feb-20 May-20 Aug-20 Nov-20 Feb-21 May-21 Feb-20 May-20 Aug-20 Nov-20 Feb-21 May-21
Stringency score (LHS, inverted) Mobility (RHS) Stringency score (LHS, inverted) Mobility (RHS)
Source: Google mobility, Oxford COVID-19 Government response Tracker, HSBC. Source: Google mobility, Oxford COVID-19 Government response Tracker, HSBC
Note: *Mobility data is an average of all the components, excluding residential, 7dma Note: *Mobility data is an average of all the components, excluding residential, 7dma
13. However, the recent sharp rise in the self- 14. Ahead of 19 July, British people were still
isolation alerts could be a drag on activity uncomfortable to return to some venues
000s UK: Number of self-isolation alerts 000s % UK: share of people that w ould be %
sent by the NHS COVID-19 app comfortable/uncomfortable going...
600 600 60 60
50 50
500 500 40 40
30 30
400 400 20 20
10 10
300 300 0 0
sporting event
... to a nightclub
... to a business
... to a party
... to a theater
... to a large
200 200
conference
100 100
0 0 Comfortable Uncomfortable
Oct-20 Dec-20 Feb-21 Apr-21 Jun-21
Source: NHS COVID-19 app statistics Source: YouGov poll (15-16 July)
4Free to View ● Economics - Europe
21 July 2021
Local restrictions start to be re-imposed in some countries
15. Latest on the restrictions from the major European countries
Country Latest lockdown measures
Germany The so-called national emergency break expired on 30 June so each federal state is now responsible for its own COVID-19
restrictions as long as the number of new infections within seven days per 100 citizens remains below 100. Above this
incidence level, the following rules would still apply, which were agreed by the Chancellery and the heads of federal states on
22 March:
Private meetings are limited to five persons (children up to 14 years are not counted) from two different
households in public and private places.
When using public transport or visiting shops, masks of the “KN95 of FFP” standards must be worn. An even
stricter rule applies for employees and visitors of nursing homes, who have to wear FFP-2 masks for at least as
long as there is not sufficient protection through vaccination.
Non-essential private domestic travel should be generally avoided (but is not prohibited). Travellers from abroad
who enter Germany from a designated COVID-19 risk area need to register before entering and have to
quarantine for at least 10 days or provide a negative test result after five days at the earliest.
Entering Germany from a high-risk designated area additionally requires a negative test result.
As of 21 July, none of the 401 districts in Germany was above the critical incidence threshold of 100 and only two
were above 35. As a consequence, most restrictions are now either eased (e.g. with respect to mask wearing in
specific areas and regions) or completely abandoned (e.g. travel restrictions) but the specific rules differ across
districts and federal states. Moreover, on 4 May, the Bundestag passed a decree that basically exempts fully
vaccinated people and recovered COVID-19 patients from almost all restriction measures, such as providing an
obligatory test to use certain services, and the general contact restrictions were lifted for them as well.
France The government introduced strict additional restrictions at the start of the year, including a stricter curfew and travel
restrictions. Full-time lockdowns (including closure of non-essential shops and services and further restrictions on
domestic travel) were then put in place in 19 departments on 20 March, then extended to all metropolitan France on 3
April (with schools being closed for between three and four weeks, including the already planned spring holidays).
Restrictions have started to be gradually eased since the end of April. Kindergartens and primary schools re-opened on
26 April, followed by secondary and high schools on 3 May. All restrictions on domestic travel were also lifted on 3 May.
On 19 May, non-essential shops, cultural places (museums, cinemas) and the outdoor part of bars and restaurants
partially re-opened, but with restrictions on capacity. Moreover, the start of the curfew was set at 9pm instead of 7pm.
On 9 June, gyms and the indoor parts of bars and restaurants re-opened (at 50% of capacity). The capacity limit for
the outdoor part of bars and restaurants was lifted, while the one on cinemas and theatres was raised to 65%. The
start of the curfew was delayed to 11pm instead of 9pm. Rules on remote working were eased. Finally, attendance at
some events of more than 1000 people (festivals, shows) was authorised with a COVID-19 health pass. Travel rules
were also eased on 9 June: all fully vaccinated people from EU and from some other ‘green’ countries are no longer
required to show a negative virus test to enter France, with only a proof of their vaccination status being sufficient.
The curfew was completely lifted on 20 June and masks outdoors are no longer mandatory effective 17 June. On 30
June, most existing capacity limits (shops, restaurants, gyms, cultural venues) were lifted. Nightclubs reopened on 9
July, but with strict protocols (capacity limit of 75% indoors and a required COVID-19 health pass).
Due to the rapid spread of the Delta variant, President Macron announced on 12 July new measures to boost
vaccination numbers, including mandatory vaccination for health care workers (controls will start to be held on 15
September) and the widening of the scope of activities requiring a COVID-19 health pass (i.e. a proof of vaccination
or a negative test): it will be required from 21 July for all leisure and cultural places (like museums or cinemas) and
from early August for bars, restaurants, shopping malls, hospitals and some transports (trains, planes). In addition,
PCR tests will no longer be free of charge from this autumn (unless obtained with a medical prescription).
Local restrictions (including a renewed curfew) were announced on 12 July for the overseas territories of Martinique
and Réunion Island. More recently, a 11pm-6am curfew was decided on 18 July in the department of Pyrénées-
Orientales (near the Spanish border), where the incidence rate rose above 200 for 100,000 people.
Italy Currently, all the Italian territory is in the ‘white’ category with hardly any restrictions (other than obligatory mask
wearing indoors – since 28 June, masks are no longer required outdoors – and some social distancing requirements).
In the COVID-19 decree approved on 18 May, the government laid out a timeline for lifting restrictions at the national
level for the ‘yellow’ regions (these do not apply to ‘white’ regions). Primary schools were re-opened everywhere (up
to 13 years of age) while high school attendance is set at between 50% and 100%. Outdoor restaurants, cinemas and
theatres and museums have already been allowed to re-open (in the case of restaurants, both for lunch and dinner).
There are no more limits for the number of people in restaurants outdoors. From 22 May, shopping centres were also
opened on weekends and ski resorts were allowed to re-open (although the ski season is basically over). From 24
May. gyms were allowed to re-open. and from 1 June, indoor restaurants. From 15 June, it will be the time of theme
parks and museums, and from 1 July, indoor swimming pools, sport halls, trade exhibitions and congresses. Clubs
will be allowed to re-open from 10 July. Home visits to relatives and friends remain permitted once a day, up to a
maximum of four people (in addition to the residents). From 19 May, the curfew has been delayed from 10pm to 11pm
(still until 5am). It will then be delayed further from 12pm from 7 June and will be abolished altogether on 21 June.
From 28 June, wearing masks outdoors will no longer be required (it still is if there are gatherings or it is indoors,
though). As for international travel, until 31 July, people arriving from the EU, the UK and Israel no longer have to
quarantine, but they will be required to show a negative COVID-19 test undertaken within 48 hours before departure.
With cases back on the rise, the government is currently reviewing the obligation of a five-day quarantine for those
arriving from countries with high infection rates (e.g. Spain) and is looking into enforcing a fixed number of negative
swab tests to remain in the “white zone”. Additionally, the opening of clubs has been pushed back with no re-opening
date communicated as of yet.
Source: Country data, HSBC
5Free to View ● Economics - Europe
21 July 2021
15. Latest on the restrictions from the major European countries (cont’d)
Country Latest lockdown measures
Spain On 9 May, the state of emergency expired and was not extended by the government. With that, the nationwide curfew
also came to an end. The freedom to travel across regions has been re-established with no regions maintaining the
external border closure in place (even though regions are still imposing travel restrictions in and out from specific areas
within the regions). On Saturday 26 June, Spain also eased its face mask rules, making masks no longer necessary in
outdoor settings where social distancing is observed. Some restrictions, though, remain in place at the regional level. Most
regions impose limitations in terms of the maximum number of people allowed for gatherings and the opening times for
restaurants and bars. Restrictions have recently been tightened in light of rising COVID-19 cases. For example, Aragon
brought forward the closing time of clubs to 12:30am and Navarra to 1am. Recently joining them, Catalonia announced
that all non-essential activities, including bars, must close by 12:30am and social gatherings must be capped at 10
people. In addition, a 1-6am curfew has been reintroduced on 17 July in several municipalities, including Barcelona.
Further, Valencia also approved curfews in 32 municipalities Spain’s external frontier remains open. For entry, a proof of
vaccination or a negative COVID-19 test is required. Even then, the UK maintaining Spain in the ‘amber’ list of countries
requiring quarantine upon re-entry could be a setback for the ability of Spain to attract foreign tourists.
UK Having been in lockdown through the first quarter of the year, the UK economy has been re-opening in recent months. In
England, schools re-opened on 8 March, rules on outdoor gatherings were relaxed on 29 March, hairdressers and outdoor
hospitality re-opened on 12 April, and indoor hospitality restarted on 17 May.
The delayed final step for England, which saw government removing “all legal limits on social contact”, including opening
nightclubs, removing social distancing requirements for hospitality and ending mandatory mask wearing, was taken
on 19 July. The government also plans to lift the requirement to self-isolate after coming into contact with someone
who has tested positive from 16 August for those who have received both doses of the vaccine and for most
schoolchildren. However, it has also said that entry into nightclubs will require proof of vaccination from September.
Meanwhile, Transport for London is maintaining an obligatory mask policy for its services.
For the rest of the UK, plans for further lifting of restrictions vary by country. For most of Scotland, hairdressers and
some retailers re-opened on 5 April and outdoor hospitality and gyms on 26 April with an indoor alcohol ban lifted and
cinemas re-opened on 17 May. Scotland moved to a ‘modified’ form of ‘Level 0’ rules on 19 July, upping limits on
social gatherings, and keeping mandatory mask-wearing. But the ‘final’ easing of restrictions, akin to that already
taken in England, is targeted for 9 August. In Wales, limits remain on social gatherings and mask wearing remains
mandatory with the next stage, including the opening of nightclubs, penciled in for 7 August. In Northern Ireland, the
next stage of reopening will be on 26 July, but limits and mask wearing will remain in place.
International leisure travel has not been banned since 17 May with regulations on testing and quarantine
requirements guided by a traffic light system with lighter restrictions for amber and green listed countries, depending
on their levels of COVID-19 infection rates and variants present (UK government, 12 May 2021). Inbound arrivals will
be subject to the same rules. Importantly though, the government has announced that it is working with the travel
industry to enable fully vaccinated travelers from amber list countries to enter without needing to quarantine.
Entry into the UK from a ‘red list’ of 50 countries, including South Africa, Brazil and India, remains banned to non-UK
or Irish nationals. As of 15 February, for those who cannot be refused entry from these countries – i.e. returning
British or Irish nationals – a mandatory 10-day quarantine in government-approved accommodation applies.
Source: Country data, HSBC
6Free to View ● Economics - Europe
21 July 2021
The current COVID-19 wave could derail the tourism recovery
16. Activity in the tourism sector was clearly improving ahead of summer holidays
Index Eurozone: Tourism and recreation PMI Index
70 70
60 60
50 50
40 40
30 30
20 20
10 10
0 0
Output New orders Backlogs of work Employment Input prices Outputprices
January February March April May June
Source: Refinitiv Datastream, IHS Markit, HSBC.
17. The number of flight seats scheduled is still up 18. However, prospects of summer holidays
relative to last year abroad for British people remain very uncertain
% UK: Share of people that hav e %
Mn Actual scheduled seats - weekly comparison Mn booked a summer holiday this year
4 4 70 70
Millions
60 60
3 3 50 50
40 40
30 30
2 2
20 20
10 10
1 1 0 0
I have, both in the
Don't know
I have not
I have, abroad
I have, in the UK
UK and abroad
0 0
France Germany Spain UK
15/07/2019 13/07/2020 05/07/2021 12/07/2021
Source: OAG. Source: YouGov poll (19 July)
19. French consumption rose more modestly in 20. Eurozone household credit demand
June, after the post-lockdown rebound in May improved markedly in Q2
Index French retail sales Index
(Jan 2020=100) (Jan 2020=100) Net % Eurozone: Demand for household borrowing Net %
60 60
120 120
40 40
110 110
20 20
100 100 0 0
90 third 90 -20 -20
lockdow n
80 80 -40 -40
second lockdown -60 -60
70 70
first lockdown -80 -80
60 60 2010 2012 2014 2016 2018 2020 2022
Jan-20 Apr-20 Jul-20 Oct-20 Jan-21 Apr-21 Consumer credit Mortgages
Source: Bank of France, HSBC Source: ECB.
7Free to View ● Economics - Europe
21 July 2021
Price pressures in the eurozone are more limited than elsewhere
21. Eurozone inflation did not move much in June…
% Yr HICP % Yr
4 4
3 3
2 2
1 1
0 0
-1 -1
-2 -2
2010 2012 2014 2016 2018 2020
Germany France Italy Spain
Source: Eurostat, European Commission, HSBC.
22. …in spite of a marked pickup in clothing 23. German producer prices accelerated
inflation markedly in June
% y -o-y CPI: Clothing and footw ear % y -o-y % Germany : PPI and CPI %
8 8 10 10
6 6 8 8
4 4 6 6
4 4
2 2
2 2
0 0 0 0
-2 -2 -2 -2
-4 -4 -4 -4
-6 -6
-6 -6
-8 -8
-8 -8 1992 1996 2000 2004 2008 2012 2016 2020
2017 2018 2019 2020 2021
PPI (industrial products) CPI (goods )
US UK Eurozone
Source: Refinitiv Datastream, HSBC. Source: Macrobond, HSBC.
24. Pay growth has risen rapidly in the UK 25. Market rate expectations on the BoE policy
rate have not increased materially
% 3m/Yr UK: Av erage weekly earnings % 3m/Yr % UK: BoE policy rate implied by %
8 8 the forw ard OIS curve
7 7 1.0 1.0
6 6 0.8 0.8
5 5
4 4 0.6 0.6
3 3 0.4 0.4
2 2
1 1 0.2 0.2
0 0
0.0 0.0
-1 -1
-2 -2 -0.2 -0.2
2016 2017 2018 2019 2020 2021 Jan-20 Apr-20 Jul-20 Oct-20 Jan-21 Apr-21 Jul-21
Regular pay (real) Regular pay (nominal)
End 2021 End 2022 End 2023
Total pay (nominal) Total pay (real)
Source: Macrobond, HSBC. Source: Bloomberg, HSBC
8Free to View ● Economics - Europe
21 July 2021
COVID-19 in Western Europe
26. New cases in Germany remain low but 27. ...while they are now clearly on the rise
they have started to tick up… in France
000s Germany : COVID-19 cases 000s 000s France: COVID-19 cases 000s
4000 32 6000 90
Thousands
Thousands
Thousands
Thousands
5000 75
3000 24
4000 60
2000 16 3000 45
2000 30
1000 8
1000 15
0 0 0 0
Jan-20 May-20 Sep-20 Jan-21 May-21 Jan-20 May-20 Sep-20 Jan-21 May-21
New Cases (RHS) Cumulative (LHS) New Cases (RHS) Cumulative (LHS)
Source: Refinitiv Datastream, HSBC. Source: Refinitiv Datastream, HSBC.
28. Infection rate is slightly edging up 29. New COVID-19 cases are sharply
in Italy accelerating in Spain…
000s Italy : COVID-19 cases 000s 000s Spain: COVID-19 cases 000s
5000 45 4000 100
Thousands
Thousands
Thousands
Thousands
4000 36 3000 75
3000 27
2000 50
2000 18
1000 9 1000 25
0 0 0 0
Jan-20 May-20 Sep-20 Jan-21 May-21 Jan-20 May-20 Sep-20 Jan-21 May-21
New Cases (RHS) Cumulative (LHS) New Cases (RHS) Cumulative (LHS)
Source: Refinitiv Datastream, HSBC. Source: Refinitiv Datastream, HSBC.
30. …and in the UK 31. A small uptick is now visible in
Switzerland
000s UK: COVID-19 cases 000s 000s Sw itzerland: COVID-19 cases 000s
6000 90 800 24
Thousands
Thousands
Thousands
Thousands
5000 72
600 18
4000
54
3000 400 12
36
2000
200 6
1000 18
0 0 0 0
Jan-20 May-20 Sep-20 Jan-21 May-21 Jan-20 May-20 Sep-20 Jan-21 May-21
New Cases (RHS) Cumulative (LHS) New Cases (RHS) Cumulative (LHS)
Source: Refinitiv Datastream, HSBC. Source: Refinitiv Datastream, HSBC.
9Free to View ● Economics - Europe
21 July 2021
32. The Netherlands are one of the most 33. Cases are still low in Norway…
affected countries in the current wave
000s Netherlands/Belgium: COVID-19 cases 000s 000s Norw ay: COVID-19 cases 000s
2000 30 140 3.5
Thousands
Thousands
Thousands
Thousands
1600 24 120 3.0
100 2.5
1200 18
80 2.0
800 12 60 1.5
400 6 40 1.0
20 0.5
0 0
Jan-20 May-20 Sep-20 Jan-21 May-21 0 0.0
NL - New Cases (RHS) BE - New Cases (RHS) Jan-20 May-20 Sep-20 Jan-21 May-21
NL - Cumula tive (LHS) BE - Cumulative (LHS) New Cases (RHS) Cumulative (LHS)
Source: Refinitiv Datastream, HSBC. Source: Refinitiv Datastream, HSBC.
34. …and in Sweden 35. Ireland has a low but rising rate of new
infections
000s Sw eden: COVID-19 cases 000s 000s Ireland: COVID-19 cases 000s
1200 12 300 9.0
Thousands
Thousands
Thousands
Thousands
250 7.5
900 9
200 6.0
600 6 150 4.5
100 3.0
300 3
50 1.5
0 0 0 0.0
Jan-20 May-20 Sep-20 Jan-21 May-21 Jan-20 May-20 Sep-20 Jan-21 May-21
New Cases (RHS) Cumulative (LHS) New Cases (RHS) Cumulative (LHS)
Source: Refinitiv Datastream, HSBC. Source: Refinitiv Datastream, HSBC.
36. Cases are rising rapidly in popular 37. ...and Greece
summer destinations like Portugal…
000s Portugal: COVID-19 cases 000s 000s Greece: COVID-19 cases 000s
1050 18 450 5.0
Thousands
Thousands
Thousands
Thousands
900 15
360 4.0
750
12
600 270 3.0
9
450 180 2.0
6
300
90 1.0
150 3
0 0 0 0.0
Jan-20 May-20 Sep-20 Jan-21 May-21 Jan-20 May-20 Sep-20 Jan-21 May-21
New Cases (RHS) Cumulative (LHS) New Cases (RHS) Cumulative (LHS)
Source: Refinitiv Datastream, HSBC. Source: Refinitiv Datastream, HSBC.
10Free to View ● Economics - Europe
21 July 2021
Fiscal measures (in the Big 4 eurozone countries and the UK)
38. Fiscal policy was highly supportive of growth last year even if a significant chunk of
support did not make it into the economy due to restrictions and was actually saved
% GDP Decomposition of deficit changes in 2020 % GDP
14 14
12 12
10 10
8 8
6 6
4 4
2 2
0 0
-2 -2
Eurozone Germany France Italy Spain* UK*
Discretionary One-offs Economic cycle Fiscal impulse Deficit change
Source: HSBC calculations based on national statistical institutes, Eurostat and European Commission, 2020 budgets and amendments. Notes: *Refers to fiscal year 2020/21.
**Discounting the impact (0.9% of GDP) of the incorporation of ‘Sareb’ under the public sector. The ‘Economic Cycle’ component for eurozone countries and the Big 4 includes
the ‘normal’ short-time work compensation schemes but not the extensions and more generous terms agreed in response to the COVID-19 crisis. For the UK, it includes the
Job Retention Scheme (JRS).
39. After the latest significant upward revisions of this year’s deficit targets by most
eurozone countries, fiscal policy could be even more supportive of growth this year
% GDP Decomposition of deficit changes in 2021 % GDP
5 5
4 4
3 3
2 2
1 1
0 0
-1 -1
-2 -2
-3 -3
-4 -4
-5 -5
Eurozone Germany France Italy Spain UK*
Discretionary Economic cycle NGEU 'grants' 2020 One-offs expiring Fiscal impulse Deficit change
Source: HSBC calculations based on national statistical institutes, Eurostat and European Commission, 2020 budgets and amendments. Notes: *Refers to fiscal year 2020/21.
The ‘Economic Cycle’ component for eurozone countries and the Big 4 includes the ‘normal’ short-time work compensation schemes but not the extensions and more generous
terms agreed in response to the COVID-19 crisis. For the UK, it includes the Job Retention Scheme (JRS).
40. Fiscal policy should remain expansive in 2022 in the eurozone thanks to the Next
Generation EU fund, while Brussels has said that EU fiscal rules will remain suspended
% GDP Eurozone: fiscal deficit decomposition % GDP
10 10
8 8
6 Total stimulus 6
Total stimulus
4 4
2 2
0 0
-2 -2
-4 -4
2020f 2021f 2022f
Previous year Economic cycle One-offs (2020) Discretionary NGEU 'grants' Overall deficit
Source: HSBC calculations based on national statistical institutes, Eurostat and European Commission, 2020 budgets and amendments. Note: The adjusted series takes into
account that due to ongoing restrictions at least part of the stimulus implemented last year and this year did not actually feed through into the economy but will only do so once
restrictions are lifted.
11Free to View ● Economics - Europe
21 July 2021
Disclosure appendix
Analyst Certification
The following analyst(s), economist(s), or strategist(s) who is(are) primarily responsible for this report, including any analyst(s)
whose name(s) appear(s) as author of an individual section or sections of the report and any analyst(s) named as the covering
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their personal view(s) and that no part of their compensation was, is or will be directly or indirectly related to the specific
recommendation(s) or views contained in this research report: Chantana Sam
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