Export controls may be imposed. Supplies are being held up at factories. Police in Italy are carrying out raids, looking for any evidence of stock being withheld or sent abroad. The grim farce of the European Union’s coronavirus vaccine crisis has taken twist after twist.
Supplies will soon pick up: so much has been ordered that the developed world at least will be awash with vaccines. The continent will finally be able to get on with inoculating its citizens by summer. But this will not end the long-term consequences of this crisis. They will run and run.
A catastrophe from the start
The EU’s vaccination campaign has been a catastrophe. The European Commission hijacked procurement, bought the wrong vaccines, in the wrong quantities, put itself at the back of the queue, and failed to invest in ramping up production. It dithered and delayed over the approvals process. Its leaders cast doubts on the effectiveness of the one jab that was available in large quantities. Regulators suspended it on the flimsiest of evidence, holding up the roll-out for several days for no reason.
Subscribe to MoneyWeek
Subscribe to MoneyWeek today and get your first six magazine issues absolutely FREE
Sign up to Money Morning
Don't miss the latest investment and personal finances news, market analysis, plus money-saving tips with our free twice-daily newsletter
Don't miss the latest investment and personal finances news, market analysis, plus money-saving tips with our free twice-daily newsletter
The statistics make it clear how badly this has gone. While the UK has given over half the adult population at least one shot, with the United States not far behind, major European countries such as France, Italy, Spain and Germany are still on less than 10%. So while infections, and more importantly deaths and hospitalisations, are collapsing in the UK and the US, Europe is going back into another lockdown.
That means economies will be shut for far longer than they otherwise would have been. Israel has opened up, the US is following behind, and Britain will start getting back to normal this month. Shops, restaurants and gyms will all welcome customers again. By contrast, Germany, France and Italy are all imposing fresh restrictions, meaning the recession will drag on for at least another three months, and governments will have to run up more debt to pay for it. Lost output will eventually be recovered as the virus comes under control, but the debt will stick around.
The EU has also done huge damage to its reputation. As it panics over the supply of vaccines, the Commission has trashed property rights and suspended the rule of law. It has seized supplies and blocked companies from exporting with, so far as anyone can tell, no right of appeal, or any form of due process. There is simply bureaucratic fiat deciding who you can sell to and who you can’t.
Vaccine manufacturing, a major industry for the EU, is going to suffer. Every sensible government is going to make sure it has its own plants, given that it now knows in a pandemic the EU will seize factories. But the effects will go further than that. Every manufacturer will be wondering what might happen to their production lines in an emergency and may conclude the EU is not a safe place to invest anymore.
Expect political chaos
Finally, it will unleash political chaos. Ursula von der Leyen, the president of the European Commission, is now surely a lame duck. There is no mechanism for getting rid of her, but she won’t be able to drive through any new programmes. That matters. The EU still needs to get its vaccination programme back on track. It needs to implement that Coronavirus Rescue Fund to stimulate devastated economies in southern Europe. Beyond that, there is still the task of restoring the zone’s competitiveness. But it is unlikely anyone will be listening to her now.
Meanwhile German elections in the autumn may sweep the Greens to power at the head of a ramshackle coalition. In France, it is hard to see Emmanuel Macron winning reelection next spring if he can’t get the virus under control. In Italy, Mario Draghi may not survive long if he can’t get jabs into people’s arms. Europe is about to go through a year of intense political uncertainty. It was already the least-attractive region in the world for investors. The vaccine crisis has made perceptions far worse. Recovery could take years.
-
Tesla seeks approval to supply electricity to UK homes – could it disrupt the energy market?Tesla has applied for a license to supply UK households with electricity, but taking on the biggest providers could prove challenging
-
Most Brits unaware onshore bonds can help beat inheritance tax – here’s howA little-known perk of certain types of bonds can let your loved ones off the hook when it comes to inheritance tax – but two-thirds of people have never heard of them
-
US stocks are more expensive than ever after Trump's tariffsWe don’t need to second-guess the effect of Trump's tariffs to think that the rest of the world offers better value
-
'The EU Chips Act is another epic failure of state planning'Opinion The European Chips Act has been a complete disaster. That holds a broader lesson for governments, says Matthew Lynn
-
Will the global boom in defence spending drive economic growth?Defence spending is soaring, and politicians in the UK and Europe are telling voters it will be a major boost to economic growth. But is that really the case?
-
The true nature of economic growthOpinion The feds making a number go up is one thing; true economic growth is quite another, says Bill Bonner
-
Trump eyes private foundations to raise tax. Will philanthropy decline?The picture is mixed, but philanthropy on the whole is alive and well, says Simon Wilson
-
'Rachel Reeves' plan to force pension funds into UK assets won't work'Opinion Hustling pension fund cash into British assets sounds like a good idea. It would be better to make Britain an attractive place to invest, says Matthew Lynn
-
Supersonic travel: How China could 'leapfrog' US and Europe's commercial aviation industryOpinion Innovation in commercial aviation has been stuck for 60 years. A commercial supersonic jet might be back on the market soon, but will China get there first?
-
How British businesses can tackle Trump's tariffsThe majority of British businesses are likely to take a hit from the chaos caused by Trump’s tariffs to reorder global trade. Companies in the firing line face some difficult decisions, says David Prosser
