Medical personnel works at the intensive care unit with Covid-19 patients in a hospital in Freising near Munich, southern Germany, on November 16, 2021.
CHRISTOF STACHE | AFP | Getty Images
LONDON — The latest wave of Covid-19 cases is hitting Europe with a vengeance with a number of countries seeing record numbers of daily infections, imposing partial lockdowns and placing more restrictions on unvaccinated people.
Germany shattered a new record on Thursday, reporting more than 65,000 new cases, with health officials warning that the true number of cases could be two or three times as many.
In the neighboring Netherlands, more than 20,000 new cases were reported Wednesday, a new record for the third day in a row, and in France, where a fifth wave of the pandemic is underway, the number of new cases topped 20,000 on Wednesday, a level not reached since Aug. 25, Reuters reported.
While the Netherlands and Austria have introduced partial lockdowns, other countries are desperate to avoid implementing full or medium-scale lockdown measures similar to 2020 given the economic harm they can do, instead opting for more Covid rules and Covid passports.
In Belgium, new Covid measures mandating working from home and indoor mask use have been announced, amid one of Europe’s sharpest rises for infections.
Belgian Prime Minister Alexander de Croo is keen to avoid another lockdown, however, telling CNBC’s Silvia Amaro Wednesday that while there was an uptick in cases, it was not as dramatic as previous waves thanks to widespread vaccination.
Nonetheless, he said, “pressure is mounting in our hospitals so we have to be prudent, but prudent measures should enable us to avoid having to close down certain parts of our society or economy.”
Covid passes or passports are becoming the norm across Europe, and state an individual’s Covid status (whether one is vaccinated or recovered from a virus). They are not without controversy, however, and such passes are leading to an increasing number of public spaces — from bars and movie theaters to Christmas markets — becoming segregated, with access granted to vaccinated people but restricted for the unvaccinated.
Germany’s outgoing chancellor, Angela Merkel, is meeting the country’s 16 state premiers on Thursday to discuss her country’s national response to what she described yesterday as a “dramatic” situation.
Germany’s states have been largely free to determine their own Covid responses and public health measures, leading to different actions to the pandemic state to state, although the government has sought temporary powers to force lockdowns and other restrictive measures on areas with high infection rates.
As it stands, Germany’s state of emergency, which enabled the government to have tighter control over public health issues, is set to lapse on Nov. 25.
Some state health ministers have urged officials to extend the state of emergency (as it allows states to implement measures like lockdowns or school closures) but the three parties currently holding negotiations to form a new government have agreed to let the state of emergency expire next week.
Thursday’s new Covid case count, of 65,371 new cases, is the first time since the pandemic began that the number has been upward of 60,000 in a single day, Deutsche Welle noted. It also reported that Lothar Wieler, the head of the country’s infectious disease agency the Robert Koch Institute, said that the true number of cases could be much higher.
“The under-reporting of the true numbers is increasing,” Wieler said during an online discussion with Michael Kretschmer, the state premier of Saxony which has the highest seven-day incidence rate of Covid in Germany.
Wieler said he believes there were “twice or three times as many” cases a day than were actually being reported. “We are in an emergency. Whoever refuses to see that is making a big mistake,” he said Wednesday.
German Chancellor Angela Merkel gestures as she sits down for the weekly cabinet meeting on April 13, 2021 at the Chancellery in Berlin.
JOHN MACDOUGALL | AFP | Getty Images
The fact that Germany is seeing such a sharp rise in cases is alarming particularly given that the country was widely praised with its early strategy to deal with the Covid outbreak.
Widespread testing and tracing, and a modern health care network, helped the country keep deaths far lower than its neighbors, although that gap has narrowed. To date, it has recorded over 5.1 million cases of the virus and almost 100,000 deaths, according to data compiled by Johns Hopkins University. For comparison, France has recorded over 7.3 million cases and just over 118,000 deaths.
European Central Bank heads into pivotal meeting with omicron infections rising
Christine Lagarde, president of the ECB, speaks at the Bank’s press conference in Frankfurt, Germany.
Boris Roessler | picture alliance | Getty Images
With inflation surging and the omicron Covid variant expected to spread through the region, the European Central Bank has the unenviable task of presenting its policy outlook for 2022 on Thursday.
The rise in the cost of living for the euro area (the 19 nations that share the euro) reached a record high of 4.9% in November, while omicron looks likely to become the dominant coronavirus strain with some European economies already locked down due to the delta variant.
“The sharp rise in infections and inflation and the emergence of the new Omicron variant has complicated the picture to an extent that the Governing Council may need more time to decide on all the details of adjusting its non-conventional policy tool,” said Dirk Schumacher, an ECB watcher with Natixis, in a recent research note.
The institution led by Christine Lagarde developed a new bond-buying program in the wake of the coronavirus in March 2020 to support the euro zone. The PEPP is due to end in March 2022 with a potential total envelope of 1.85 trillion euros ($2.19 trillion).
The ECB has also kept its asset purchase program, known as APP, amid the pandemic which has a current monthly pace of 20 billion euros. The central bank has been using this program in combination with PEPP to sustain the 19-member economy.
Schumacher added that Natixis still expects an announcement that the PEPP program will end by March and “we expect a clear signal that the APP will be used in a more flexible way.”
A big focus of this week’s meeting will be the new staff projections for inflation and growth. They show whether the inflation target of 2% will be met over the medium term, which is ultimately ECB’s primary mandate.
“I see an inflation profile which looks like a hump. So it has clearly increased over the last three quarters and we know how painful it is,” Lagarde said at a Reuters conference on Dec. 3,
“And a hump eventually declines and this is what we project for 2022,” she added.
Another key question is how the ECB will bridge the end of the PEPP program at the end of March into a more flexible and potentially larger APP without provoking major market volatility and keeping financial conditions on “favourable” terms. The ECB is expected to stress the need for flexibility.
“Flexibility, in our view, means varying purchases depending on the inflation outlook and financing conditions, i.e. preserving the principle of ‘favourable financing conditions’ that characterises the PEPP,” Spyros Andreopoulos, a senior European economist at BNP Paribas, said in a note.
“This view has been supported by recent ECB rhetoric that has emphasised the need to maintain flexibility, as opposed to pre-committing to a fixed volume of purchases.”
UK inflation hits 10-year high ahead of key Bank of England meeting
Shoppers wearing protective face masks walk through the rain on Oxford Street in London on June 18, 2020, as some non-essential retailers reopen from their coronavirus shutdown.
Tolga Akmen/AFP/Getty Images
LONDON — U.K. inflation climbed to a 10-year high in November as consumer prices continued to soar ahead of the Bank of England‘s crunch monetary policy meeting on Thursday.
The Consumer Price Index rose by 5.1% in the 12 months to November, up from 4.2% in October, which was itself the steepest incline for a decade and more than double the central bank’s target.
Economists polled by Reuters had expected a reading of 4.7% for November, and the Bank of England had projected that inflation would hit 5% in the spring of 2022 before moderating towards its 2% target in late 2023.
On a monthly basis, U.K. inflation rose 0.7% in November from October, above a Reuters poll for a 0.4% increase.
Core CPI, which excludes volatile energy, food, alcohol and tobacco prices, rose by 4% year-on-year against a Reuters forecast of 3.7%, and 0.5% month-on-month versus a 0.3% projection.
The Bank of England’s Monetary Policy Committee meets Thursday to decide whether to tighten monetary policy, with inflation surging and the labor market remaining robust, but the rapid spread of the omicron Covid-19 variant has cast fresh uncertainty over the economic recovery in the short term.
The MPC defied market expectations in November by voting 7-2 to hold interest rates at their historic low of 0.1%, but analysts are split on whether it will pull the trigger on rate hikes on Thursday in light of the emergence of omicron.
“Unfortunately for consumers, peak inflation may still be a few months off. Today’s CPI data only serves to increase the pressure on the Bank of England to raise interest rates at its MPC meeting tomorrow,” said Richard Carter, head of fixed interest research at Quilter Cheviot.
“However, the Bank of England may well decide that discretion is the better part of valour and instead opt to wait until next year given the current uncertainty surrounding the impact of the Omicron variant on the economy, coupled with the risk that further restrictions may need to be introduced before long.”
Most Chinese companies could delist from US, says TCW Group
Budrul Chukrut | LightRocket | Getty Images
Chinese companies listed on Wall Street will likely to be cut off from U.S. capital markets in the next three years as tensions between Beijing and Washington persist, says one global asset management firm.
“I think for a lot of Chinese companies listed in U.S. markets, it’s essentially game over,” David Loevinger, managing director for emerging markets sovereign research at TCW Group, told CNBC Wednesday. “This is an issue that’s been hanging out there for 20 years — we haven’t been able to solve it.”
TCW Group had $265.8 billion in assets under management as of September 30, 2021, according to the company’s website.
The U.S. Securities and Exchange Commission this month finalized rules to implement a law that would allow the market regulator to ban foreign companies listed in the U.S. from trading if their auditors do not comply with requests for information from American regulators.
The law was passed in 2020 after Chinese regulators repeatedly denied requests from the Public Company Accounting Oversight Board to inspect the audits of Chinese firms that list and trade in the United States.
Given the current level of distrust between the U.S. and Chinese governments, and with the bilateral relationship unlikely to improve anytime soon, there is “no way we are going to solve this in the next few years,” Loevinger said.
“So the reality is, I think, by 2024, most Chinese companies listed on U.S. exchanges are no longer going to be listed in the United States. Most are going to gravitate back to Hong Kong or Shanghai,” he told CNBC’s “Street Signs Asia.”
Less than six months after going public, Chinese ride-hailing giant Didi said it will start delisting from the New York Stock Exchange, and make plans to list in Hong Kong instead.
When a company delists from an exchange like the Nasdaq or the New York Stock Exchange, it loses access to a broad pool of buyers, sellers and intermediaries.
Chinese regulators were reportedly unhappy with Didi’s decision to list in the U.S. without first resolving outstanding cybersecurity concerns. Regulators told the firm’s executives to come up with a plan to delist from the U.S. due to concerns around data leakage, according to reports.
Beyond Didi, many of China’s top internet companies listed in the U.S. have already undertaken dual listings in Hong Kong. Some high-profile names include e-commerce giant Alibaba, its rival JD.com, search engine giant Baidu, gaming firm NetEase and social media giant Weibo.
“We have already hit the turning point,” Loevinger said, pointing to Didi’s delisting announcement. “I just don’t think China’s government is going to allow U.S. regulators to have unfettered access to internal auditing documents of Chinese companies.”
“And if U.S. regulators can’t get access to those documents, then they can’t protect U.S. markets from fraud,” he added.