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.
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.
-
Reeves urged to axe stamp duty from UK shares held in an ISAChancellor Rachel Reeves is reportedly considering axing stamp duty from UK shares held in stocks and shares ISAs. What could it mean for your portfolio?
-
Family investment companies explained: how the ultra wealthy shield their money from the taxmanWealthy families are increasingly turning to family investment companies to keep more of their money away from HMRC – but what are these arrangements and how do they work?
-
Yoshiaki Murakami: Japan’s original corporate raiderThe originator of Japanese activism, Yoshiaki Murakami, was disgraced by an insider-trading scandal in 2006. Now, he's back, shaking things up
-
Galliford Try has firm foundations for strong growthBuilder Galliford Try has a finger in a wide range of pies, notably important work in the public sector
-
Card Factory is a stand-out small-cap going cheapIn a digital world, we still value the personal touch. That’s good news for Card Factory, whose unique business model is suited to weather all economic storms
-
How much gold does China have – and how to cash inChina's gold reserves are vastly understated, says Dominic Frisby. So hold gold, overbought or not
-
Debasing Wall Street's new debasement trade ideaThe debasement trade is a catchy and plausible idea, but there’s no sign that markets are alarmed, says Cris Sholto Heaton
-
Europe’s new single stock market is no panaceaOpinion It is hard to see how a single European stock exchange will fix anything. Friedrich Merz is trying his hand at a failed strategy, says Matthew Lynn
-
Should UK schools ban smartphones?The effects of smartphones on young minds are disturbing, with calls for politicians to make school smartphone bans mandatory. Is radical action needed?
-
Are venture-capital trusts worth investing in?Venture-capital trusts are a tax-efficient way to invest in early-stage companies. But are they worth the risk?
