Pandemic triggers European rethink on supply chains

Subject

Economic recovery.

Significance

The policy response to the COVID-19 pandemic has underscored the risks associated with depending on multinational supply chains for production. Given how vastly spread supply chains are in Europe, more severe lockdowns in France, Spain and Italy will slow the recovery in Germany, which has been hit less severely by the crisis. Even once supply chain activity has returned to normality, it can take several more months to restore levels of output.

Impacts

• The health and economic impact of COVID-19 will force many European countries to reconsider their relations with China.
• The creation of more national supply chains would be a significant blow to industrial development in developing countries.
• Employees will be reluctant to return to work in areas with high levels of COVID-19 infections, potentially further disrupting production.