Matthew Lynn said Angela Merkel’s panel of economic advisers had already cut their growth forecast for Germany this year as the country braces itself for a third wave of Covid-19 infections while Emmanuel Macron has been forced to put the French economy back in lockdown as hospitals are overwhelmed with patients.

Mr Lynn said successful vaccine programmes in the UK, USA and Israel had led to falling case numbers in those countries while mainland Europe was still struggling to contain the pandemic.

Writing in the Telegraph, he said: “So far that has mainly been a health catastrophe, but very soon it will turn into an economic one as well.

“Greece sparked the first eurozone crisis, but the vaccine debacle will ignite the second one.”

The financial author said the EU was already stumbling from one vaccine blunder to another after ordering too few doses and spending too little money to ensure an adequate supply before lashing out at the drug companies making the vaccines.

He warned the decision by Germany, France and Italy to put the Oxford-AstraZeneca jab on hold was likely to cost a heavy toll in lives and would soon be followed by a financial crisis as the countries’ economies will remain locked down for longer than necessary.

He said: “As the UK and the United States cruise past 60 to 70 percent vaccination levels, shops, restaurants and gyms will be reopening.

“Their economies will be growing in the 7-8 percent range compared to zero in the EU.

“That is a vast gulf. At the same time, trashing property rights, and arbitrarily seizing vaccine production plants, will make it virtually impossible for multi-nationals to invest in the zone.”

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Mr Lynn said borrowing would also soar across Europe with expensive support measures remaining in place while they were lifted elsewhere while tax revenues would remain depressed.

And he predicted the EU vaccine fiasco would create a political backlash which had already started to be felt in Germany.

He said: “Angela Merkel was always the world’s most over-rated leader but her chronic caution, indecision and dithering, along with her personal responsibility for putting her inept ‘mini-mutti’, Ursula von der Leyen, at the top of the EU, will bring her long reign to an ignominious close, as well as potentially handing power to the first Green leader of a major economy.

“Global investors have not started to price that in yet.

“But as the evidence becomes unavoidable, and as the gulf in performance widens, that will change.

“It was the Greek crisis that sparked the first eurozone crisis in 2010 as a decade of incompetence and spiralling debt brought the single currency to the edge of collapse.

“It is now surely inevitable that the vaccine crisis will trigger the next act in that unresolved drama.”



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