European continues to re-open Economy

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This week, governments across the EU will continue to loosen limits on retailers, schools, and some sporting events in one country.

Spain, Italy, and Austria all began on Tuesday to ease restrictions. Denmark and the Czech Republic took similar steps on Wednesday. This is certain to be a staggered, multi-phase process that extends over many weeks, but it is moving in the right direction. If things get worse, governments, businesses and individuals, already know how to respond, having successfully enforced quarantine rules for the past six weeks.

German chancellor Angela Merkel offered her perspective on the pandemic during a press conference in Berlin last Wednesday(23), dropping some science.

German chancellor Angela Merkel

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She spoke about the “R0” (“R naught”) of the new SARS coronavirus, which is the math used to count the reproductive rate of a virus. “We’re now at a reproduction factor of about 1,” Merkel said. “So one person is infecting one other.” Should R0 rise to 1.1, German hospitals get overwhelmed by October and the country closes.

A reproduction rate of 1.2 would put the system at risk by July. At 1.3, the date moves forward to June and it’s back to square one.

Meanwhile, “The curve has become flatter,” Merkel said. “It needs to be so it doesn’t overtax our health system.”

That’s been the reason for the shutdowns all along to curb a surge of COVID-19 patients in hospital intensive care units.

In keeping with a cautious leader trained in science, Germany plans to delay reopening schools until May 4, which is similar to some U.S. states, including Massachusetts.

During a mid-week meeting with German governors, frustrations boiled over as Economics Minister Peter Altmaier took heat for wanting to keep the economy closed.

According to Der Spiegel, Armin Laschet, a Merkel ally, lashed out at Altmaier, noting that without more aggressive reopenings, “many of the stores they were talking about wouldn’t be around anymore.” Ultimately, he won a compromise on partially reopening malls.

Some countries are easing restrictions faster than Germany.

In Spain, where the fatality count remains more than 500 daily, the government allowed manufacturers and construction companies to restart as of Tuesday.

Italy followed a similar pattern last week. Italy is opening bookshops, dry cleaners, and retailers of baby clothes. Landscapers and designated manufacturers makers of tools, machine parts, radiators, and heaters can go back to work.

Other restrictions, including shelter-in-place rules and bans on public gatherings, will remain in place until at least May 3. Some regions in northern Italy say they won’t adopt Rome’s new guidelines right away. They were the epicenter of the European outbreak of SARS-CoV-2, so have their reasons for extra caution.

According to Franco Locatelli, chair of the Nation Health Council, Italy’s COVID-19 reproductive rate is now about 0.8, which is better than Germany’s. The spread is weakening.

Austria removed restrictions on home-improvement stores, but is requiring employees and customers to wear masks.

Home improvement stores have been open throughout many states here in the U.S.

The Czech Republic, among the most aggressive nations in easing social and economic limits, began a “targeted quarantine” policy last week, allowing a variety of retailers to open. They were the first to let sports events resume.

Still, investors are cautioned to be ready for fits and starts in post-pandemic life.

Continued economic contraction is likely,” Bretton Woods Research founder Vladimir Signorelli warned in a client note on Friday.

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