Facing a swift economic collapse, Europe slowly reopens the economy

The daily death toll from the coronavirus fell in the U.K. and Italy as political leaders wrestled with how to ease the restrictions that have strangled their economies without sparking a new wave of infections.

The U.K. reported 315 deaths from Covid-19, down from the 621 confirmed yesterday, bringing the total to 28,446, the third-most in the world. Italy’s toll was 174, the fewest since its national lockdown was imposed on March 10. Spain’s 164 fatalities were the lowest in more than six weeks, Germany’s 76 new deaths were the fewest since March 31 and France reported 135, the fewest since March 22.

While the U.K. isn’t set to unwind the lockdown and an Observer poll showed two-thirds opposed lifting it, the government says the peak of the outbreak has passed. Prime Minister Boris Johnson is preparing guidance for the next steps of the crisis, including whether employees need to wear protective equipment and how transport should be used.

“It’s definitely not going to be business as usual, but we do want to make sure that people understand where the route map lies,” Transport Minister Grant Shapps said on Sky News on Sunday.

Johnson, who was himself hospitalized with the coronavirus, told the Sun newspaper Sunday that his condition was so serious his doctors were planning for the worst. “The bad moment came when it was 50-50 whether they were going to have to put a tube down my windpipe,” the premier said. “It was a tough old moment, I won’t deny it. They had a strategy to deal with a ‘death of Stalin’-type scenario.”

Meantime, political leaders in Spain and Italy are confronting a crisis that has morphed into one involving economic life and death.

The euro-area economy could shrink as much as 12% this year and fail to return to its pre-coronavirus size until the end of 2022, the European Central Bank said last week. The report is the latest to show how early predictions of a strong rebound in the second half of the year have given way to uncertainty over the timing of the recovery, as countries plot different paths to ease lockdowns.

“I’m not sure what will be left,” said Alberto Visentini, whose sporting goods store near Milan’s Central Station has been shut since early March. Visentini, 61, had originally been told he could reopen March 25.

The economic paralysis is adding pressure on leaders to find a way to ease restrictions as government struggle to prop up businesses that are dormant because of the lockdowns. In Italy, where rules are slowly being lifted, Prime Minister Giuseppe Conte apologized for delays in distributing financial aid and pushed back against criticism, especially in the industrial north, that he’s being too cautious.

“There is disappointment among many economic operators,” Conte told La Stampa. “I understand them, but to restart the economic cycle of goods and services that are less essential we need customers to feel safe and protected.”

In Spain, Prime Minister Pedro Sanchez faces a parliamentary vote this week on extending the state of emergency that began March 14. Measures to further ease Europe’s strictest lockdown start on May 4 and will proceed in stages, depending on local pandemic data. Sanchez said yesterday that the Spanish economy, which is driven by tourism, would likely contract more than 9% this year.

Four islands, three in the Canaries and one in the Balearics, will be the first areas allowed to open restaurants, bars, hotels and stores. Spain’s government has also said the use of masks will be mandatory on public transport as of Monday. This weekend, the government allowed people out of their homes to exercise and walk for the first time under the lockdown.

Germany, which reported less than 100 new deaths on Sunday, will allow playgrounds, zoos, museums and churches to reopen, but will maintain travel restrictions and most other curbs on public life. Chancellor Angela Merkel said a broader easing of the country’s lockdown will be evaluated on May 6.

In the U.K. the government, is due to give an update on its lockdown on May 7. The administration is examining whether it could relax the two-meter social distancing rule, which could allow more businesses and schools to reopen, The Daily Telegraph reported today. The Sun paper, meanwhile, reported that the U.K. could begin relaxing restrictions on May 26.

Johnson’s government has been attacked by opposition politicians for what they describe as series of missteps since the crisis began to unfold. His administration didn’t stockpile enough medical kit when the outbreak began in China, allowed mass sports gatherings to continue and schools open for too long and didn’t lock down the economy quickly, they say.

Moreover, Johnson abandoned the testing and tracing strategy, which the World Health Organization says should be the “backbone” of the global response, on March 12 after cases outstripped testing capacity and officials conceded the pandemic could no longer be contained.

The U.K. is now working to develop a program to test track and trace contacts that’s seen as vital to containing the virus as the country comes out of lockdown. Similar systems are credited with reducing the pandemic’s spread in countries including South Korea, Taiwan and Vietnam.

England’s Chief Medical Officer Chris Whitty has cautioned that, while the first phase of the outbreak is over, there remains “a very long way to run” in the fight against the virus. That means the need to track the spread of the disease will be critical to lifting movement restrictions in a way that avoids a second peak.

Read other ‘reopening’ stories in Fortune

—A Shenzhen entrepreneur gets a 6 a.m. throat swab and mandatory quarantine
—A tech founder in Chengdu returns to a changed workplace
—A Shanghai consultant eschews a contact-tracing app
—A startup operations manager in Hangzhou sees automation accelerating
—A Beijing tech worker needs a quarantine certificate to dine out
—A Harbin university professor confronts a second lockdown

Subscribe to Fortune’s forthcoming Eastworld newsletter for expert insight on what’s dominating business in Asia.

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