Sectors & markets

European Resilience

The tone has changed in Europe as EU27 states are set to move from protectionism to a joined-up approach, while the resilience gap between northern and southern European nations widens

In a fortnight when the EU’s Chief Brexit negotiator Michel Barnier tested positive for COVID-19, and his UK counterpart David Frost self-isolated with ‘mild symptoms,’ it’s hard to imagine a more symbolic threat to Brexit.

The virus also revealed fissures in European multilateralism, with initial responses from European states heavily weighted to protectionist measures, such as advancing unilateral policies and aid packages and, in some cases, halting free movement.

EU leaders confirmed the closure of the EU’s external and Schengen borders for at least 30 days on 17 March, as the bloc struggled to come up with a unified response to the outbreak.

Yet observers note that we are now leading into a time when the EU will put forward a more joined up approach.

‘They feel that the decision to essentially shut down Schengen was political, as a result of internal border closures,’ says Anna Rosenberg, Head of UK and Europe at Signum Global Advisors. ‘But EU leaders have seen the impact of their protectionist ways, and similar effects of the virus in different countries has led leaders to act together.’

A video conference between EU27 leaders has been scheduled for 27 March, while the Chairman of Eurozone Finance Ministers, Mario Centeno of Portugal, confirmed last week that his group would also be meeting to discuss a coordinated economic response.

Rosenberg expects the EU offer to contrast with the significant financial packages put forward by British and American governments. She instead anticipates the EU packages to be smaller in size, but to be announced on an ongoing basis. She also predicts that the EU will focus its efforts on increasing political unity and medical cooperation.

This is amid growing calls for the EU to do more. Spanish Prime Minister Pedro Sánchez has urged the European Union to launch a ‘Marshall Plan’ for major public investment that would serve to stimulate the economy in the face of the pandemic.

Winners and losers

Whatever the outcome, Rosenberg argues that Europe is likely to be more politically resilient to the COVID-19 crisis than common wisdom might suggest.

She notes that few countries have elections scheduled in the coming two years – thereby benefiting from greater ‘room for manoeuvre’ as they respond to the crisis without needing to look over their shoulders – with the notable exceptions of Germany, The Netherlands and Norway.

This broader political stability is also a key indicator in how countries will bounce back from the virus, with Norway, Sweden, Luxembourg, Austria and Switzerland are set to perform best, according to Signum Global Partners’ COVID-19 Resilience Index. These countries also benefit from strong healthcare systems.

Countries most resilient to the COVID19 shock tend to include Europe’s wealthiest economies – starting with several of its smaller Central and Northern states. Meanwhile, most vulnerable countries tended to have the greatest exposure to Italy (including geographically), China (via trade), and tourism.

France performs best of Europe’s large economies, followed by Germany and the UK. And while it is often assumed that Germany’s economy most heavily depends on exports to China, it is not the most exposed: Switzerland, Slovakia, Ireland, and Hungary all have a higher dependence on exports to China and may be more affected by a slump in Chinese demand.

Italy performs worst, with Slovenia, Hungary, Romania, and Croatia also particularly vulnerable, in part because of their exposure to China and direct geographic and trade exposure to Italy.

When coupled with a weighting of population shares above 65 years of age, however, Eastern European countries overall benefit from somewhat younger populations. The research also showed that despite having old populations overall, many Southern European countries benefit from the (good) pre-existing health condition of their citizens.



Anna Rosenberg is a Partner and Head of UK and Europe at Signum Global Advisors, and lead on the Signum Global Partners COVID-19 Resilience Index. She recently participated in a Webinar organised by the French Chamber of Great Britain.

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