Governments across Europe reimposed lockdowns in December to respond to spikes in COVID-19 cases and deaths, capping a year with the biggest peacetime contraction since the Great Depression. Restrictions were tightened in some places the past two months with severe consequences for workers and businesses.
The economy of the European Union is back in recession after GDP contracted again in the fourth quarter, and major EU countries, like Germany and France, continue to struggle in early 2021. Vaccine shortages also threaten to extend restrictions into the summer and postpone the recovery. UK GDP also likely shrank in the final three months of last year, and is being hurt by lockdowns and Brexit this quarter.
State-funded support packages that kept businesses afloat are reaching their limits. Despite unprecedented government support for wages, the EU unemployment rate reached 7.5% in December with 16 million unemployed.