Coronavirus second wave is hitting Europe in very different ways. JPMorgan has a theory on it


View of Piazza di Spagna on October 20, 2020 in Rome, Italy.

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LONDON — There’s no doubt that Europe is seeing a second wave of coronavirus infections, but the surge is not affecting its major economies in the same way.

The U.K., France and Spain, as well as the Netherlands, have all seen a sharp rise in cases since late August-early September. But Italy and Germany have lagged behind their counterparts, only now seeing numbers starting to pick up dramatically.

JPMorgan analysts have looked at the phenomenon and believe they know what’s behind the disparity.

“Most likely, in our view, the difference between Germany and Italy, on the one hand, and France, Spain, the Netherlands and the U.K., on the other, is not mobility but rather the breadth of mask wearing and the efficacy of test and trace regimes,” JPMorgan Economist David Mackie said in a note Thursday.

Spain and France reached the grim milestones of over 1 million coronavirus cases each on Wednesday while the U.K. lags with just over 792,000 cases, according to a tally kept by Johns Hopkins University.

Italy, where the virus first emerged in Europe in February, and Germany, have around 449,000 and 398,000 confirmed infections, respectively. They too now are seeing rapid increases in cases, however.

Test-and-trace and masks

“The efficacy of such (test-and-trace) regimes is multidimensional and depends on the speed at which infectious people are identified, the number of their contacts that are traced quickly, and the compliance regarding isolation requirements,” Mackie noted.

He conceded that the success of these tracking programs are hard to quantify given the lack of available data — although Germany has cited its contact-tracing regime for the country’s relatively low case number and death rate.

Other constraints on public behavior, particularly mask-wearing, could play their part too, JPMorgan said.

Germany’s rules state masks should be worn on public transport and in indoor public places while Italy says they should be worn in all public places, likewise in Spain.

In the U.K., masks must be worn in shops and on public transport. The Netherlands earlier in October advised the public to wear masks in indoor public places but it is still not mandatory, although it is on public transport.

Mackie noted that mask-wearing could be making a large impact on the virus’ reproduction rate but said it’s tricky to quantify “because what matters is not only government requirements, but also compliance.”

He believes the degree of punishment for not wearing a mask could indicate “that compliance will be higher in countries with greater financial consequences for non-compliance.”

“It is certainly the case that mask requirements and fines are the least onerous in the Netherlands, which has seen the most dramatic increase in new infections. Meanwhile, Italy has among the tightest requirements and the highest fines, and the second wave in Italy is much more moderate than in the Netherlands,” he said.

“This certainly suggests that mask wearing may be part of the explanation for the cross-country differences in new infections across Europe,” Mackie said, while acknowledging the limitations of the hypothesis.

Lag effect?

JPMorgan noted that a lag effect could also be a reason behind Germany and Italy’s lower numbers.

“It is certainly possible that Germany and Italy simply lag other countries by two to three weeks. Given the exponential growth of new infections, the picture can change very quickly and, notably, infections have accelerated in both countries in recent days,” he said.

Mobility trends could play a role in different infection rates given increased travel for summer vacations when lockdowns were lifted, and then as students returned to schools and universities, he argued.

But having analyzed Google and Apple mobility data, JPMorgan said this could not account for a discrepancy in cases between countries, given that the data showed that Germany and Italy had seen the largest increases in mobility since initial lockdowns had ended.

“Thus it doesn’t seem that differences in mobility — and hence daily contacts — can explain cross-country differences in the pace of new infections. This means that other determinants of the effective reproduction number are driving the cross-country experiences.”



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