Let’s hope Europe’s economic policies are better than its approach to lockdown

So just how effective were the different lockdown policies implemented by Europe’s diverse states?

Bloomberg has tried to make a comparison using an index complied by the Blavatnik School of Government at the University of Oxford.

“While not a gauge of whether the decisions taken were the right ones, nor of how strictly they were followed, the analysis gives a clear sense of each government’s strategy for containing the virus. Some — above all Italy and Spain — enforced prolonged and strict lockdowns after infections took off. Others — especially Sweden — preferred a much more relaxed approach. Portugal and Greece chose to close down while cases were relatively low. France and the U.K. took longer before deciding to impose the most restrictive measures.”

And the conclusion is that there seems to be little correlation between the stringency of a nation’s restrictions and the extent to which excess deaths exceeded normal levels.

Bear in mind that the system for measuring policy stringency is likely making some heroic assumptions; nor does it strip out the impact of the collective public response to the pandemic, which might have varied considerably between communities and across countries.

But it does make one think that the timing and targeting of restrictions on movement and association (and perhaps the extent to which these were integrated with testing and tracing) might have been more important than their completeness or universality.

Now, with the latest data from Euromomo, a European mortality monitoring project, indicating that excess deaths are down towards normal levels, it looks like the peak has passed.  At the very least then, we should expect a substantially better co-ordinated and less economically heavy-handed response should there be a second wave.

It’s also worth asking if the severity index has any implications for economic recovery.  

Bloomberg suggests that while the countries which had the most intense lockdowns are likely to suffer the biggest drop in economic activity, the differences may be less than one might think, given the level of integration in the European economy.

Nonetheless, the recovery looks a bit more complex.

In the short term, the appropriateness and stability of post-lockdown restrictions, and the response of businesses and workers, will powerfully influence the pace of recovery.  Clumsiness and uncertainty is likely to cost jobs and deter investment.

In the longer term, recovery will depend on the private sector – typically employing some three-quarters of the workforce – returning to, and preferably improving, its productivity growth.  Over the last ten years, the Euro zone has performed dismally on the productivity front (its nominal GDP measured in US dollars increasing by some 10% to the US’s 40%).  So far there are few signs of the European Commission questioning its regulatory model. Throw in the shock of the UK’s departure from the EU and the chances for a more responsive European economy do not look promising.

And what of the British government’s policies?

The response of the economic commentariat has so far been less than favourable, with a lashing from the Economics Editor of the Times for “a slavish following of epidemiological advice  … hard enough to wipe out up to a third of economic output”.

But Boris is showing no lack of ambition.  On the one hand he has said no to austerity, a pledge likely to put immense strain on the public finances.

On the other, his instinct will be to do all he can to increase productivity growth.  This means using both the recovery from Covid and the break from the EU to increase the competitiveness of the UK’s most productive industries.  For this exercise, the country’s key workers are its bankers, software engineers and television producers.

It will not be easy doing both things at the same time.  But it’s hard to think of a better test for the proposition that for the UK to succeed it must break with the European approach to economic regulation.

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