EU production losses from coronavirus to cost hundreds of billions – Ifo

LONDON (ICIS)–The coronavirus is set to cost Europe hundreds of billions of euros in loss of production, according to data released by analysts at the ifo Institute on Thursday.

“If the shutdown lasts for more than a month, the production losses quickly reach dimensions that are well beyond the growth slump of previous recessions or natural disasters, at least in the history of the European Union,” said ifo president Clemens Fuest.

To assess the impact of the pandemic on production, the economic research group has calculated how much value is lost due to a halt in production in the UK, Spain, Italy, France, Austria and Switzerland, following the forecasts previously made for Germany.

Projections for the costs caused by delays to normal economic activity, loss of business relations during the crisis and permanent damage caused by bankruptcies were also made.

The table shows current projected losses for a two-month shutdown, how this would grow if production stayed stationary for a third month, the impact of a single week’s extension or what this could grow to with a further one- to two-month extension.

Along with this, is given the loss of growth in percentage points (PP).

Country	Current projected losses for two-month shutdown	PP	Third month	PP	One-week extension	PP	One- to two-month extension	PP
UK	193-328	7.7-13.0	271-480	10.7-19.0	19-38	0.8-1.5	152	6.0
Italy	143-234	8.0-13.1	200-342	11.2-19.1	14-27	0.8-1.5	108	6.3
Spain	101-171	8.1-13.8	141-250	11.3-20.0	10-20	0.8-1.6	78	6.1
Austria	34-57	8.5-14.2	47-83	11.9-20.9	3-7	0.8-1.7	26	6.6
Switzerland	49-81	7.8-12.9	69-119	11.0-19.0	5-10	0.8-1.5	38	6.1

(in €bn)

Although Italy has recorded the highest number of deaths due to the virus, the UK stands to face the highest costs from a two-month shutdown.

Austria could be affected by the largest loss of growth by percentage points, both from the current shutdown timeframe and from any further extensions.

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