Is Europe heading towards a “hot autumn” of discontent?
- Political and Economic Risk Consulting
Is Europe heading towards a “hot autumn” of discontent?
As the economic and social impacts of the COVID-19 pandemic become clearer and evolve, we analyse the potential for protests across the EU and the UK in the months ahead.
Despite unprecedented state support and a forthcoming EU financial assistance package, economic grievances are expected to increase as individuals feel the impact of the pandemic-related downturn.
- “Restriction fatigue” is also likely to grow over the coming months, boosting the potential for localised anti-government protests and clashes with police.
- The co-existence of a variety of grievances – some longstanding – means that the potential is high for large-scale, sustained protests, including instances of civil unrest, mainly in urban areas.
- Most protests will be directed against governments or public authorities, but companies perceived to be responsible for the imposition of local restrictions or that are perceived to be behaving irresponsibly towards their workforce face a heightened threat.
After Europe became the epicentre of the COVID-19 pandemic in March, concerns increased about the future political and economic stability of the EU and its member states. Moreover, the pandemic unfolded in the context of already mobilised societies, heightened activism and frequent protests, particularly about climate change and living standards. While the lockdowns that were imposed to slow infections brought street protests to an end, the underlying drivers for these demonstrations remained and – in some cases – have been amplified (income inequality) or transformed (climate change) by COVID-19. This has created a conducive environment for an uptick in protest activity in the months ahead.
Economic hardship: a key driver for unrest
After EU leaders on 21 July agreed a EUR750 bn financial support package – called Next Generation EU – to tackle the economic impact of the COVID-19 pandemic and support the long-term transformation of the bloc’s economy, the narrative of the “EU in perpetual crisis” has started to change. Combined with relatively low current infection rates, the lifting of restrictions and encouraging economic data, investor confidence in the EU has increased in recent weeks. The euro on 27 July reached a two-year high against the US dollar.
However, while agreement on the EU recovery fund is a highly significant achievement, the fund does not provide an immediate economic stimulus or direct support to citizens. Assuming the European Parliament (EP) and member state legislatures approve Next Generation EU, the moneys will only be disbursed from 2021, and the first projects funded through the recovery instrument are unlikely to make an impact before the end of 2021. It will remain up to member states to support their economies through fiscal measures during the bloc’s worst economic downturn. According to the European Commission (EC), the EU’s economy is forecast to shrink by 8.3% in 2020.
Although EU member states have mobilised hundreds of billions of euro in direct financial support, financial guarantees and deferrals (including of tax or social security payments) to keep people in employment and businesses afloat, these measures only cushion the economic impact of COVID-19. Millions of people benefitting from government support schemes still face financial losses, unemployment is rising, and livelihoods – particularly of low-skilled workers and those already dependent on state support – are threatened. For example, in Spain, one of the countries in Europe hardest hit by the pandemic, unemployment is forecast to surge from 14% to 22% by Q4 2020, according to the OECD, and food banks in the country have reported a 40% increase in demand. In Italy, according to reliable media reports, COVID-19 has resulted in more than 1m people falling below the poverty line.
Despite improvements in the economic outlook on the back of economies reopening, there are signs that the recovery has plateaued amid a reported new rise in infection rates. Furthermore, the economic rebound is highly unlikely to be felt by those individuals most badly affected by COVID-19, and, above all, is unlikely to translate into job creation. To the contrary, it is widely expected that, despite state support, countless businesses, particularly smaller ones, will not survive until the end of the year or will cut jobs to stay afloat. This will obviously affect their owners and employees, but it will also make the actual economic damage more visible for the wider population and impact perceptions about the overall economic outlook. For example, the tourism and hospitality sectors, which play a particularly important role in countries like France, Italy, Greece, and Spain, have not recovered as strongly as other sectors and the outlook remains bleak. Mass layoffs are also likely to increase over the next months as some businesses, for example in the aviation sector, go through extensive restructuring due to the long-term damage COVID-19 has done to their business models.
As the negative economic impact of COVID-19 becomes increasingly obvious, dissatisfaction with governments and large businesses is likely to increase, raising the potential for targeted protests. Some companies that have announced layoffs in response to the crisis have already faced demonstrations. Earlier in July, workers at an aircraft manufacturer went on strike in France and Spain, and such incidents are likely to become more common over the next six-to-12 months. While protests related to the economic situation are likely across the region, countries where concerns about living standards drove protests before the outbreak of COVID-19 – including France – are more likely to experience large-scale anti-government protests.
“Restriction fatigue” is likely to become a challenge as the year progresses and as the realisation grows that a return to something akin to the “old normal” is highly unlikely until well into 2021. As patience with government-imposed measures wears thin, enforcing social distancing requirements will become increasingly challenging. In the UK, for example, police and local authorities not only had to deal with overcrowded beaches ahead of the formal easing of restrictions, but they also faced violent opposition on some occasions when shutting down illegal street parties in London.
Continued restrictions on public life will heighten discontent, particularly among those already critical or opposed to governments. If infections should rise significantly again, forcing governments to reimpose tighter measures, protests by those who oppose restrictions are likely to return and grow. Clashes with police are likely to accompany some of these demonstrations.
Such protests have not caused significant disruption to business so far. However, if restrictions are tightened again, large retailers in particular could again face more small-scale disruptive protests, for example against wearing masks while shopping.
In future, should an anti-COVID-19 vaccine be developed successfully, companies in the pharmaceutical sector could be targeted by members of the anti-vaccination movement, which has participated in anti-restriction protests in several European countries.
Given the economic and political damage, we do not anticipate that governments will resort to regional or even national lockdowns again unless healthcare systems are in danger of being overwhelmed. However, even localised lockdowns would likely be challenging to enforce, particularly in urban areas. Enforcing localised quarantines has prompted violent protests in Germany on at least one occasion, and if such measures are used more frequently, popular opposition is likely to increase, too.
Cross-fertilisation of protests
Various grievances and motivations for widespread social unrest co-exist and frequently feed off each other, creating new alliances or mutating into new, broader issues. Solidarity protests with events abroad, and their adaptation to local contexts, add to the complexity of the situation and increase the potential for large-scale mobilisation.
Rioting youths, often from migratory, socially disadvantaged backgrounds, in France and most recently in Germany have highlighted that the pandemic, and continued restrictions on many social and leisure activities, is compounding existing socio-economic and other grievances. Criminologists have pointed to the lack of previously existing “pressure valves” as one explanation for the riots. Already tense relations between some members of these groups and police hold the potential for rapid escalation, particularly in the context of worldwide protests against police brutality and discrimination of racial minorities prompted by the death of an African American man, George Floyd, at the hands of police in Minneapolis (US). Larger-scale protests are more likely in European countries, such as France and the UK, where long-standing grievances in some urban areas and fraught community-police relations have repeatedly led to unrest in the past. However, the potential for such incidents has increased across Western and Northern Europe where similar issues exist, for example in Belgium, Germany, and Sweden.
No end in sight
COVID-19 compounds existing problems and makes the occurrence of so-called “trigger events” more likely. Governments will have to maintain and enforce restrictions on public life for months to come, and confrontational situations involving the authorities will take place across the region countless times every single day. Companies will most likely be only indirectly impacted by increased social unrest. However, any companies that are perceived to be responsible for the imposition of local restrictions and perceived to be behaving irresponsibly towards their workforce face a heightened threat of targeted protests. Where protests evolve to incorporate other issues, such as climate change, companies that are the usual targets of such protests are likely to be most affected.