The Economic Linkages of Covid-19 Across Sectors and Regions in Europe

Abstract

This paper builds a spatial model of trade with supply-chain links to examine the effect of economic links and anti-COVID policies on the spread of the COVID-19 pandemic during the first wave across NUTS2 regions of the European Union (EU) and the UK. We find that the effort to reduce infection rates was more successful in the UK than in the EU, and that the deaths due to the trade vector were 10% on average across Europe. Our results imply that without the policy response in Europe, the number of deaths during the first wave would have been about 4,520,000 higher in the EU and around 1,240,000 greater in the UK, with significant variations across regions. Oberbayern in Germany and South Yorkshire in the UK appear as the most effective in reducing the death burden of COVID-19 at different points during the first wave. Moreover, 42% and 37% of the total deaths in the UK and the EU, respectively, could have been prevented if the policy implemented in these two regions had prevailed throughout Europe.