According to credit insurer Euler Hermes, Europe is facing a five-week delay in meeting its vaccination targets. If this delay is not corrected, it could cost 90 billion euros in 2021. For Belgium, this cost amounts to three billion euros – 600 million euros per week.
How was this economic cost of delays in vaccination against Covid 19 calculated? Firstly, with regard to the vaccination objectives of the European Commission, in particular that of reaching 70% of the vaccinated population, by summer 2021. In relation to this objective, the European average is currently 5 weeks delay. With differences in pace between countries – Belgium is rather average.
Calculation of losses
And these delays involve losses. “Lhe economic structure of each country of the European Union was analyzed, as well as the health restrictions that have been in place since last year – but which change over time, since over time they become much more targeted “, details Ana Boata, director of macroeconomic research at Euler Hermes.
Health restrictions are in fact transformed here into economic losses: closure (even partial) of the economy, drop in confidence, decrease in investment, lack of economic recovery… And public spending to support the people and sectors most affected.
Belgium: 3 billion in 5 weeks
“For Belgium, we arrive at three billion over these five weeks. Today, we can clearly see that these health restrictions are a bit like stop-and-go: we release, we close, we release, we close … And when we close, we simply observe a mechanical recession. If we do not manage to catch up, if we do not really manage to reopen in a sustainable way the sectors most affected, we will have episodes of recession quite often, perhaps until the end of the year, if we cannot get the vaccination machine started.
Vaccination should be six times faster
And the major risk is that budgetary expenditure “come at the expense of economic stimulus measures. “If we do not speed up the vaccination campaign, Ana Boata warns, we risk having to use European funds for something else – saving the economy and not the recovery. “ And according to Euler Hermes, the average European rhythm of vaccination should be six times faster, to reach the target set by the European Commission.
Every week counts
90 billion euros on a European scale for five weeks delay, that is why today economists, too, are obsessed with the speed of vaccination. “Because vaccination is the most important economic multiplier, emphasizes Ana Boata. This vaccination will give us the most probable economic scenario for the coming quarters. It is not impossible to catch up with the current backlog – five weeks for the general population, three weeks for the vulnerable population, but every week counts.
Bottlenecks and slow start-up
In addition to current supply issues, the production and distribution of available vaccines, there were especially slow start-up which explains the delays observed. Long European bargaining on prices and contracts, coordinated between 27 Member States. For Ana Boata, “cWhat made the difference was the delay we were able to take in certain orders at European level because we had to negotiate, we had to align ourselves, and we probably lost a few good weeks compared to United States or other countries “.
Great Britain, for example, signed a contract with Astra Zeneca, three months before the European Union. And on the question of cost, and according to the figures available, the State of Israel would have paid 50% more than the European Union per dose of Pfizer vaccine. In particular to ensure a rapid supply. In Israel, all people over 60 are now vaccinated. And the country will undoubtedly be one of the first to be able to relax its economy in a consistent and sustainable way.
The cost of delay, four times the cost of vaccines
In Europe, the estimated economic cost of delaying vaccination is four times the cost paid for vaccines. Does this mean that the European Commission should have agreed to pay more for the vaccines? Not necessarily. Claiming that paying more is enough to get mass vaccines faster is still theory – and the cost-only approach needs to be qualified. In practice, if each country in its corner is prepared to pay more to obtain vaccines more quickly, this risks causing a gigantic game of overbidding on vaccine prices.
While we know it, many countries around the world will likely be doomed to wait for vaccines and don’t even know if they’ll be able to afford them.
The overall objective remains to vaccinate vulnerable populations as quickly as possible. across the planet. And in the good news department, saccording to the latest figures, the number of vaccinations against Covid-19 worldwide has exceeded this Wednesday the total number of confirmed cases, a momentum that is certainly symbolic, but which also underlines the progress made in taming the pandemic.