‘Out of control’: European leaders scramble to control the second wave, with a state of emergency and lockdowns

European leaders are scrambling to put a cap on surging infections in the region, with governments reimposing sweeping restrictions and shutdowns in an effort to curb the spread of the virus. 

The situation has got to a point now where, in the last 24 hours, France has declared a public health state of emergency, the U.K. is approaching a second national lockdown and Germany has introduced a raft of new rules in an effort to lower the infection rate.

Europe now has over 7.2 million confirmed cases of the virus, according to the World Health Organization (WHO), and hospitalizations are rising at a worrying rate.

Pantheon Macroeconomics’ Chief Economist Ian Shepherdson on Tuesday characterized rising cases in Europe as “out of control,” even when compared to the U.S., the nation with the highest number of cases, at 7.9 million, according to Johns Hopkins University’s data.

The French government declared a public health state of emergency on Wednesday as the country saw hospitalizations from Covid-19 jump above the 9,100 threshold for the first time since June 25, Reuters reported. New confirmed cases of coronavirus in France reached 22,591 on Wednesday, public health data showed, up from 12,993 cases the day before. The state of emergency gives officials more power to deal with the spread of Covid-19.

French President Emmanuel Macron announced later on Wednesday that nine of the country’s largest cities, including Paris, will have to abide by a curfew from 9 p.m. to 6 a.m.  This starts on Saturday, will last for four weeks and means that residents of those cities will not be allowed out between those hours except in exceptional circumstances. “We have to act. We need to put a brake on the spread of the virus,” Macron said.

Germany has also announced new rules after Chancellor Angela Merkel met with regional leaders on Wednesday to discuss infection surges in parts of the country; German states can decide their own strategy to curb rising cases, which has led to variations of the rules from state to state.

Summing up the complex criteria of measures, economist Greg Fuzesi from JPMorgan said municipalities were now expected to tighten restrictions if new infections exceeded 35 per 100,000 inhabitants over seven days. In this case, private gatherings must be restricted to 25 in public spaces and 15 in private spaces, he said in a note Thursday, and states need to “apply additional mask-wearing requirements, to implement earlier closing times in bars/restaurants, and to impose limits on the number of participants at public events.”

If new infections exceed 50 per 100,000 inhabitants over seven days, a municipality is expected to limit social gatherings to 10 people, and impose a mandatory closing time of 11 p.m. for bars and restaurants. Germans are being discouraged from vacationing in virus hotspots and some states have banned tourists from parts of the country with high infection rates.

Infections are rising in Germany to such an extent that Shepherdson said the country had “lost control of Covid cases.” Daily new infections topped 5,000 earlier this week and the public health body, the Robert Koch Institute, reported 6,638 new cases Thursday.

The U.K. government introduced a new Covid-19 alert level system earlier this week, with the city of Liverpool and its suburban areas designated as “very high” risk and put under a strict local lockdown. Households in the area are not allowed to mix indoors or outdoors, and gyms, leisure centers, betting shops and casinos are closed. Pubs and bars have to close too, unless they serve food.

The strictest measures could now be expanded to other parts of northern England, including Manchester. The city’s mayor, Andy Burnham, said he is meeting Prime Minister Boris Johnson’s team on Thursday morning to discuss what to do next.

Johnson is under pressure to go further to curb the spread of the virus, with the government’s scientific advisors advocating for a second national lockdown, albeit it a shorter, two-week shutdown, to act as a “circuit breaker” to stop the spread. The leader of the opposition Labour party, Keir Starmer, on Tuesday added his support to the calls for a lockdown. The U.K. reported 19,724 new cases Wednesday, up from 17,234 Tuesday.

Coronavirus concerns are weighing on market sentiment Thursday as investors react to the situation.

Deutsche Bank strategists led by Jim Reid said that Wednesday’s developments reflected “sadly yet another day of bad news out of Europe,” and warned that Italy was also seeing a sharp rise in cases, having lagged its neighbors in seeing a second wave.

“With Italy reporting a record number of cases at 7,332 (albeit with much higher levels of testing now than back in March) the rise in numbers there are bringing it more into line with the recent increase we’ve seen in the U.K. and France in recent weeks, though Italy’s numbers still remain at lower levels by comparison,” he said in a note on Thursday.