Germany set to extend lockdown on concerns over new coronavirus variants

  • A draft document emerged early on Wednesday outlining plans between Chancellor Angela Merkel and state officials to maintain the lockdown.
  • The re-opening of schools is a priority for the German leadership, although the country's federal system means that individual states are expected to be able to decide how to do this.
  • The reopening of shops and hotels could begin next month in areas where the infection rate is low too.

Chancellor Angela Merkel is set to announce Germany will extend its lockdown until March 14 amid concerns over new strains of the coronavirus.

A draft document emerged early on Wednesday outlining plans between Merkel and state officials to maintain the lockdown and to urge that citizens maintain social-distancing rules, but to gradually lift some restrictions in the coming weeks.

The re-opening of schools is a priority for the German leadership, although the country's federal system means that individual states are expected to be able to decide how to do this. The reopening of shops and hotels could begin next month in areas where the infection rate is low too. Restrictions were due to end on Feb. 14.

There are concerns in Germany over the spread of more contagious variants of the virus, particularly the mutation first discovered in the U.K. last fall. Yet Germany's daily number of new infections has been falling amid a continued lockdown of public life across the country.

Public health body, the Robert Koch Institute, reported 8,072 new coronavirus cases on Wednesday and 813 deaths, bringing the total number of infections to date to around 2.3 million, and the death toll to 62,969.

Earlier Wednesday, one German lawmaker reportedly described the situation as "highly fragile."

Speaking to German media outlet Spiegel Online, Winfried Kretschmann, premier of the southern state of Baden-Wuerttemberg, said that there was concern in Germany that the infection rate could soar, as seen in other countries where variants have helped infections to surge.

"We can see in other countries, such as Portugal, how quickly the tide can turn," Kretschmann said, Reuters reported. Germany has recently sent medics to help in Portuguese hospitals that have been overwhelmed by an influx of patients following a rise in Covid infections.

EU's slow rollout

The slow rollout of coronavirus vaccines in Germany, as well as the rest of the EU, is a bugbear for the German government, which is a key pillar in the bloc. The EU was slower than the U.K. and U.S. to order vaccines from key drugmakers and has faced supply shortages.

The longer vaccination rollouts take, the more prolonged the economic damage of lockdowns are expected to be. Germany's economy contracted by 5% in 2020, according to full-year GDP (gross domestic product) data released in January.

Ludovic Subran, chief economist at Allianz, told CNBC Wednesday that the slow vaccination rollout could really damage the wider EU's growth prospects in 2021.

"I'm getting a bit nervous, and we're only in February, that we're missing the boat here, that the vaccination is the best investment there is and we should put all our forces (efforts) there," he told CNBC's "Street Signs Europe."

"Our forecasts show that Europe will only go back to pre-crisis (growth) levels by 2022, and then we saw the vaccination chaos and we started to think 'OK, are we really jeopardizing the recovery here' … the problem is we're vaccinating four times slower than the U.K. and U.S. here," he said, adding: "This is really a big issue, because this is going to make or break the GDP recovery of 2021 for Europe."

—CNBC's Annette Weisbach contributed to this article.

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