No More National Lock-Downs for European Leaders; Good News for the Eurozone Economy

Posted Monday, September 28, 2020 by
Skerdian Meta • 2 min read

The total lockdowns in March and April were detrimental for the European economy, sending it diving lower, with the GDP contracting more than 10% in Q2. The economy rebounded in the following months after the reopening, but it slowed down again in the last couple of months and services fell into contraction again in September on fears of more lockdowns, as the covid cases increased, or so they say.

But, European leaders are announcing that there will be no more national lockdowns, as French and German officials commented a while ago. Although, we are seeing partial ones, which still are not good for the economy. But another total lockdown would be detrimental. This is positive news for the Euro, with EUR/USD retracing above the 20 SMA today on the H4 chart.

German chancellor, Angela Merkel, spoke to Bild newspaper

  • We need to quickly contain the virus infection, but also keep the economy running
  • If things continue, we will have tens of thousands cases a day like other countries
  • Need to quickly contain the infections and intervene
  • But also set priorities and keep the economy running
  • That includes schools and kindergartens staying open
The suggestion here is that Germany won’t be reverting back to the mass lockdown seen back in March and April. However, tougher restrictions to be introduced alongside fears of the virus itself will also take a toll on the economy. And the bigger concern is that such a situation may end up being a staple in the ‘new normal’. If that is the case, any hopes of a sustained and robust recovery will surely be thrown out the window over the next few months.

At the same time, France stays adamant that they will not return to a mass lockdowns. French finance minister Le Maire said that there are no plans for a new general lockdowns, as is the case for most of Europe, despite the number of virus cases surging in recent weeks. Given how devastating the lockdowns in March and April were to the economy, there’s very little likelihood we will see a repeat of that again. So, we will see how they will proceed.

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