However, there is considerable uncertainty about how much of pre-pandemic social life will return and how long it will last. Some constraints will remain in place. The recovery in travel, for example, will be slow and uneven, and there will probably be “travel bubbles” — a scenario anticipated in Australia and New Zealand, where the virus has been nearly eliminated.

The EU will likely accommodate summer travel by introducing quarantine-free border crossing for those with vaccine passports, but restrictions on long-distance travel will remain.

Disparities in the pace and scope of the resumption of social activities will most likely coincide with income gaps. While some emerging markets will have reached high vaccination rates (Chile, Morocco and Turkey are already ahead of the EU), most of the developing world will not have contained the virus.

Border controls between the vaccinated rich world and the unvaccinated poor world will probably tighten, especially if new variants continue to emerge. The fallout will be felt most directly by migrant workers, but broader consequences, such as a contraction of long-distance tourism, will severely undercut some economies.

Movement of people

Moreover, globalisation will be affected. Although barely any person-to-person contact is required to ship a container halfway around the world, the same cannot be said for managing production networks or finding new clients. The evidence suggests that measures altering the movement of people (such as new visa rules or the opening of new travel routes) affect trade in goods. Lasting obstacles to passenger travel would ultimately reduce international trade and investment, productivity, and growth overall.

More important, a full (if gradual) return to normal life will be possible only if vaccines remain effective. So far, they seem to be succeeding brilliantly. But the emergence of vaccine-resistant variants would force governments to keep severe restrictions in place.

Surprisingly little is known about the trade-off between public health and economic activity in the context of this pandemic. Scoreboards based on GDP growth rates and death tolls may generate plenty of commentary, but they are grossly misleading. Italy experienced sharp losses of life as well as GDP last year, not because its policy response was inefficient but because it was the first European country to be hit and had to respond to the sudden shock with economically costly measures.

Trade-off

To gauge how countries have managed this trade-off, we have compared the week-by-week evolution of infections with economic activity, as measured by the OECD GDP tracker.

Before the British variant (B117) emerged, Covid-19’s contagiousness, as measured by its “reproduction rate” (R), was about three, meaning that one infected person could be expected to contaminate three others. The aim of confinement measures was to reduce R to below one, at which point viral incidence would be diminishing.

In spring 2020, several European countries reduced R from three to about 0.7 within a few weeks.

The corresponding reduction in economic activity varied from around 15% in Germany (where the first wave was mild) to nearly 30% in France, where construction stopped and a quarter of private-sector employees were put on furlough. The treatment was effective, but it came at an extremely high economic cost.

By contrast, when Europe braced for another lockdown in autumn, the economic cost of public health measures was much lower. R was brought down to about the same level (0.8), but the economic cost was two to three times lower, and the effect was remarkably uniform across countries.

Governments had learned from the first wave, so the second-wave response was less stringent but better targeted. Masks and protective equipment were more widely available, and companies had learned to adapt to the restrictions.

Recurring emergence of variants will make further adaptations more likely and, if these variants are more contagious, the costs will rise.

The longer the pandemic lasts, the more severe the damage will be, and the higher the costs. A truly global vaccination rollout remains vital.

Olivier Blanchard is a former chief economist at the International Monetary Fund. Jean Pisani-Ferry is a senior fellow at Brussels-based think-tank Bruegel