Spain, Portugal and Greece face further summer economic hit if vaccines delayed       

Economists said the variants, along with the slow rollout of vaccines in the eurozone, 'mean there is a growing risk of another summer tourist season being lost' and will deliver 'a huge dent in the Greek economy and substantially delay the recoveries in Spain and Portugal'

The new threat coming from new Covid variants would mean restrictions on foreign travel remain in place longer, even as domestic restrictions are lifted.

Large chunks of the economies in Spain, Greece, and Portugal will be severely disrupted for a second year if the new variants of Covid-19 emerge to threaten the summer tourist season, economists have warned.

Capital Economics in London said the variants, along with the slow rollout of vaccines in the eurozone, "mean there is a growing risk of another summer tourist season being lost" and will deliver "a huge dent in the Greek economy and substantially delay the recoveries in Spain and Portugal".

Its senior Europe economist Jack Allen-Reynolds said the new threat coming from new Covid variants would mean restrictions on foreign travel remain in place longer, even as domestic restrictions are lifted. 

With delays in the vaccination programme, the eurozone is more vulnerable to the risk than other countries that containment measures will be prolonged.

"And even if domestic lockdowns are eased, international travel restrictions could put Europe’s summer tourism season at risk," he said. 

Capital Economics said Portugal, Greece, and the economies of small Mediterranean islands face the greatest risk because they rely so much on summer tourists "and therefore how dependent these economies’ recoveries are on travel restrictions being lifted before the summer".

"Among the four largest economies, Spain is most at risk," the economist said, but "the seasonal pattern is less extreme in France and Italy, and almost non-existent in Germany". 

"So, if tourism numbers remain low this summer, as seems increasingly likely, GDP would remain further below its pre-crisis level in Spain," he said. 

Mr Allen-Reynolds said the economies of Belgium and Germany could get a boost as domestic holidaymakers spend at home.

More broadly, Capital Economics pointed to the importance of the EU rolling out vaccines to boost their economies. 

"Our forecast that the eurozone economy rebounds strongly hinges on Covid-19 restrictions being lifted by the middle of the year," the analysts said.  

"Unfortunately, vaccine supply shortages, distribution problems and concerns about variants could force governments to keep restrictions in place for longer, or remove them more slowly, than we have assumed," they said.  

Meanwhile, French prime minister Jean Castex said the Covid-19 situation in France remained fragile but that for the moment there was no need for a new national lockdown.

Mr Castex said the rate of infection had not significantly increased over the past two weeks, even if the pressure on French hospitals remained strong.

“We must stick with the current restrictions we already have in place ... but the situation today does not justify a new national lockdown,” he told a news conference.

Mr Castex acknowledged that many other countries had started their vaccination campaign more quickly than France but he said this was the result of the French government’s decision to begin with the most vulnerable people in retirement homes. 

• Additional reporting Reuters