The announcement of the pandemic in China last year raised a justified alarm around the world. It brought back memories of the 1918 pandemic at the end of the First World War, incorrectly defined as “Spanish”, its duration and its economic and human consequences. A century has not passed in vain. Epidemiological research and treatments intervened in an extraordinarily short time. Interventions were already announced during the summer of 2020. Finally,  anti-virus remedies from different sources proved effective. In many ways, the results of research and experimentation had exceeded the more optimistic forecasts. But, unfortunately, not all countries were able to benefit equally from the solution.

What is the situation at the beginning of the second half of 2021? The pandemic crisis has generally been successfully countered in most countries of the Northern hemisphere. But serious and still alarming rates of infection occur in economically fragile areas: from India to Brazil as well as in the poorest countries of Latin America and Africa.

However, in the Northern Hemisphere, the economic and social consequences have had a different impact.  

In China, after the pandemic crisis of early 2020 in Wuhan, Hubei Province, the recovery of the economy has been rapid and significant. Already in 2020 the economy had started to grow again with, at the end of the year, an increase in GDP of 2 per cent. And 2021 will close, according to forecasts, with an increase in GDP of over 8 percent, one of the highest in the last decade. In other words, the economic consequences  of the coronavirus pandemic have been overcome.

In Japan, the old leader Shinzo Abe's policy was fundamentally oriented towards supporting the population and relaunching investments with public aid of around 1,000 billion dollars. An amount  which was then increased by his successor, Yoshihide Suga, to 1,250 billion. The result does not betray expectations. The economic and social effects of the pandemic will be neutralized with an average annual growth of 2 percent for 2020-21 higher than before the pandemic.

But for many reasons the American case is not only important from a health point of view with the extraordinary acceleration of spot vaccinations, but also from the economic and social perspectives. The drop in the level of unemployment from the maximum of 15 percent in April 2020 - with 22 million unemployed - to 6.5 percent in June 2021 with the average growth of 700 thousand employed per month, is clearly relevant. On this basis it is possible that in the second half of next year unemployment will reach 3.5 per cent as it was in the pre-pandemic period, the lowest rate in many decades.

The crisis in the United States was initially compared to that of the 1930s, but this is an inappropriate comparison. Franklin D. Roosevelt found America prostrated by three years of crisis with a quarter of the working population unemployed and impoverished. In the first years of his presidency, between 1933 and 1935, he not only gave rise to the social recovery, but implemented public investments and social reforms that changed the face of America. It remains an outstanding episode in American history. However, the extent of the US recovery after the new pandemic collapse remains a relevant example of the Biden government policy.

The European case

However, the exception is not in the Chinese, American or Japanese growth, but in the European economic and social crisis and, particularly, in many eurozone countries. Almost 5 trillion dollars was invested in the United States in 2020-21. In the Eurozone, investments of  750 billion euro have been planned to be used between 2021 and 2026. Overall, less than what Japan, as single country, invested between 2000 and 2021.

In Europe, the return to income levels equal to those prior to the epidemic is expected around 2023, as in the case of Italy, Spain and France to cite the three largest eurozone countries. The delay does not entail a return to pre-crisis unemployment, but its increase, once prohibition of dismissals is no longer effective.

In addition, in 2023 the rule that requires the reduction of the public deficit toward zero  will be enforced again. In other words, a general line of deflation in the middle of the pandemic economic and social consequences. The difference from the other major economic areas we have seen is striking.

Public debt has increased due as an automatic effect of the reduction in GDP. In Italy it reached a level around 160 per cent, more than 120 per cent in France, while in Spain reached 120 percent is triple the debt prior to the European crisis of 2008-2010.

Yet the public debt can be counterbalanced by the resurgence of the economy, and through the growth it can be gradually reduced as a percentage of GDP. On the contrary, without a strong recovery of growth, the debt can only be lowered by reducing the expenses in public investments and social welfare. Mainly, through the reduction of expenses for public pensions and for assistance to unemployed. In other words, with a worsening of social conditions and an increase in inequalities.

However, these are not outcomes with an equal degree of incidence in the European Union. German is a country with a high degree of competitive capacity and exports at a global level. The reduction of the growth of the domestic demand finds a compensation in the extraordinary flow of surplus in the trade balance. Also a restrictive policy allows maintenance of growth in the framework of the minor public deficit and debt. So Germany shows a different prospect in respect to other major countries of the eurozone.

Rising unemployment is, instead, an essential part of the other major Eurozone countries. Unemployment level reaches 8 percent in France, while in Spain is almost the double. In Italy, it is on average around 10 per cent.

Poverty and inquality

The pandemic is increasing inequality. The Italian example is enlightening. At the end of the post-pandemic recovery the GDP will still be under the 2008 level and more or less equal to that of the beginning of the century. In the same period, poverty will have increased from 10 percent to an average 20 per cent in the Mezzogiorno that has the lowest per capita average GDP of the euro-countries.

And iinequality is the most relevant feature. The savings of wealthier families have largely increased. During the pandemic, between February 2020 and February 2021, bank deposits increased by over 160 billion, the highest growth ever recorded, reaching totally 1,750 billion, more than the current Italian GDP. A testimony of the increase in wealth for the wealthy classes.  At the same time,  millions of families have fallen into poverty, being constrained  to seek the assistance of Catholic and secular organizations for daily food.

Summing up, the eurozone policy, confronted with the coronavirus pandemic, presents in some of biggest European countries three particular aspects: the postponement of the recovery over the next five years, the growing  of a high rate of unemployment, greater job insecurity and  the growth of inequalities. We can say the less congruent policy in fighting the economic  and social consequences of the pandemic attack.

But this doesn’t necessarily mean that things will continue along this road.  Many things can happen in the more or less near future, to different national and European levels, against the wrong choices adopted so far and their economic and social consequences. However, the political scenario remains uncertain and it is difficult to make forecasts.