Western Europe has been severely affected by COVID-19, and the resurgence in new COVID-19 cases linked to the new variant and the post-Christmas period drives tighter government restrictions. Countries of South Europe, such as Spain, Greece, Portugal, and Italy, are suffering the most from the pandemic, whereas countries of Northern Europe, such as Germany and the Netherlands, are more resilient to the crisis. Although service turnover continues to deteriorate, industrial turnover and especially turnover in manufacturing spur optimism for the recovery. Firms should prioritize segments promising stronger returns in 2021, and brace for a bumpy road to recovery in the second half of 2021, clearly accelerating in the latter half of the year.

United Kingdom: The new COVID-19 variant and Brexit will challenge business performance in 2021

Despite the start of vaccine rollouts, consumer surveys suggest that the return to normalcy will be slower than anticipated. The new COVID-19 variant is driving tighter restrictions in the UK, and the lockdown is likely to be extended until the end of March. Hospitalizations are not yet under control, and new COVID-19 cases remain critically high. B2C firms should factor in a negative impact on their retail channel in the beginning of 2021, closely communicate and engage with their retailers to exchange information about the retailers’ financial situations, and make efforts to further invest in their own online retail channels and their supply chain and distribution systems.

Germany: The German economy appears much more resilient to COVID-19 compared to the rest of Western Europe

Delays in the German vaccination plan frustrate officials and confirm concerns about a deferred economic recovery to the second half of 2021. The European Commission failed to procure sufficient volumes of the COVID-19 vaccine in early 2021 from the appropriate vaccine producers, after misjudgments and errors in central planning resulted in small purchase volumes. However, only the Pfizer-BioNTech and Moderna vaccines have been approved by the European Medicines Association (EMA), signaling the shortage of vaccine supply until the remainder of vaccine producers are granted EMA approval. The AstraZeneca vaccine and the Johnson & Johnson one-shot vaccine should be granted approval in mid-February, meaning vaccinations will substantially accelerate only in the next few months. The slow rollout of the vaccination plan in Germany reaffirms our expectation that necessary lockdown measures will stay in place at least through the end of March.

In our last webinar on Europe: Adapting to Life After the Lockdown, FrontierView’s research team covered developments across the major markets of Western, Central, and Eastern Europe related to the outbreak, relaxing restrictions, and economic outlook moving into H2 2020 and 2021. For our most updated outlook on Western Europe’s recovery and a deep dive into country outlooks, register for our upcoming webinar, The Western Europe Outlook for 2021 on March 9, 2021.

Watch the full webinar presentation below:

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