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Johnson & Johnson delays vaccine rollout in Europe after US health agencies call for pause

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Johnson & Johnson said it would delay the planned rollout of its Covid-19 vaccine in Europe after US health agencies called for a pause of the jab’s use on Americans while they investigate several incidents of rare blood clots.

In a joint statement on Tuesday, the US Centers for Disease Control and Prevention and the Food and Drug Administration said they were reviewing six reported US cases of “rare and severe” blood clots in individuals who had received the J&J vaccine. The individuals were all women aged between 18 and 48, who developed symptoms six to 13 days after vaccination. 

Peter Marks, the head of the division at the FDA that oversees vaccines, said scientists believed the J&J vaccine was causing similar severe reactions to those experienced by a small number of people who have received the AstraZeneca shot.

“The probable cause that we believe may be involved here is a similar mechanism that may be going on with the other adenoviral vector vaccine,” he said. “That is an immune response that occurs very, very rarely after some people receive the vaccine. That immune response leads to activation of these platelets and these extremely rare blood clots.”

The intervention from the US agencies is only a recommendation, although CVS and Walgreens, two of the country’s biggest pharmacy chains, immediately paused their use of the vaccine.

US officials said they expect the pause to last “a matter of days”, with the CDC’s vaccine advisory committee due to meet on Wednesday to debate whether to continue recommending the vaccine for everyone.

The European Medicines Agency said it was a continuing a probe announced last week with a view to deciding whether “regulatory action may be necessary”. It was “currently not clear” if there was a causal link between the vaccine and the blood clot symptoms, it said. However, J&J took pre-emptive action, announcing that it would halt its planned rollout of the jab in Europe, which was due to start on Wednesday.

“We are aware that thromboembolic events including those with thrombocytopenia have been reported with Covid-19 vaccines,” J&J said in a statement. “At present, no clear causal relationship has been established between these rare events and the Janssen [J&J] Covid-19 vaccine,” it said, adding that it was working closely with experts and regulators to assess the data.

The delay to the planned rollout in Europe is another setback for the EU, which had hoped J&J’s vaccine would enable member states to accelerate sluggish vaccination campaigns following months of squeezed supply and logistical problems.

J&J was due to supply 55m of the 360m doses that the EU is expecting to receive in the second quarter. Since J&J is a single-shot vaccine — the other approved Covid-19 vaccines require two doses — 55m shots are enough to immunise just over a quarter of the 207m people the bloc hopes to vaccinate between April and June.

“This is quite a significant blow if the rollout of the J&J vaccine is delayed for several weeks,” said David Oxley, senior Europe economist at Capital Economics.

The call to suspend the rollout of the J&J vaccine because of blood clot fears follows similar issues with the AstraZeneca jab, which were investigated by the EMA. Last week, the EMA concluded that very rare cases of unusual blood clots should be listed as a side effect of the AstraZeneca vaccine.

Both jabs are adenovirus-based vaccines. The BioNTech/Pfizer and Moderna shots use messenger RNA technology. Moderna and BioNTech shares jumped 10.5 per cent and 6.1 per cent, respectively, on Tuesday as the vaccine makers benefited from news of the J&J pause.

Norway’s health authorities estimated that their vaccination plans could be delayed by eight to 12 weeks if they could not use either the J&J or the Oxford/AstraZeneca vaccine.

In the US, almost 7m doses of the J&J vaccine have already been administered. Federal vaccine distribution sites will stop using the jab, and individual states are likely to follow suit. New York health commissioner Howard Zucker said in a statement on Tuesday morning that the state would follow the federal recommendation and suspend using the jabs “immediately” while the vaccine was evaluated.

Anyone with an existing appointment for the J&J vaccine at the state’s mass vaccination states would be given the Pfizer shot instead, Zucker said.

Eric Kremer, an expert in adenoviruses at the Montpellier Molecular Genetics Institute, said that while the side effect was “extremely rare”, the J&J cases did not look “encouraging”.

Cody Meissner, chief of paediatric infectious diseases at Tufts Children’s Hospital and a member of the FDA’s immunisation advisory panel, said: “It’s not completely surprising that there appears to be some association with blood clots because the AstraZeneca vaccine also used an adenovirus.”

South Africa also suspended use of the J&J vaccine on Tuesday in response to the US pause. South Africa has used J&J doses to vaccinate nearly 300,000 health workers to date with no reports of clotting disorders linked to jabs in the country.

Zweli Mkhize, South Africa’s health minister, said that the suspension was “a precautionary halting” in order to understand the US decision, not a complete rejection of the J&J shot, which has become a major plank of the country’s rollout plan with over 30m doses on order.

“We hope the deliberations will only take a matter of days,” Mkhize added. “We expect it should not have a significant impact on the rollout.”

The CDC and FDA said the symptoms of cerebral venous sinus thrombosis and low blood platelet levels discovered in the six women — the same symptoms identified in recipients of the AstraZeneca vaccine — may require different treatment to typical blood clots and that anticoagulant drugs “may be dangerous”.

The White House insisted the pause would not prevent it hitting its target of overseeing 200m vaccinations in the Biden administration’s first 100 days. 

“This announcement will not have a significant impact on our vaccination plan: Johnson & Johnson vaccine makes up less than 5 per cent of the recorded shots in arms in the United States to date,” Jeff Zients, the co-ordinator of the president’s Covid-19 task force, said in a statement.

“Based on actions taken by the president earlier this year, the United States has secured enough Pfizer and Moderna doses for 300m Americans.”

Pfizer plans to ramp up production of its vaccine, chief executive Albert Bourla tweeted Tuesday. The company now expects to be able to supply the US 10 per cent more doses, for a total of 220m, by the end of next month, and the 300m agreed with Washington by mid-July, a fortnight earlier than planned.

Additional reporting by Donato Paolo Mancini in Rome, Richard Milne in Oslo, Michael Peel in Brussels, Martin Arnold in Frankfurt and Joseph Cotterill in Johannesburg



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European Commission upgrades economic forecasts

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The European Commission has sharply raised its economic forecasts for the coming two years, as an accelerating vaccination campaign helps the eurozone recover from the historic blow delivered by the pandemic.

The euro area will expand by 4.3 per cent this year and 4.4 per cent in 2022, Brussels said on Wednesday, compared with previous forecasts for 3.8 per cent growth in both years. As a result, all member states are now expected to regain their pre-crisis output levels by the end of next year, following a historic 6.6 per cent slump in 2020.

The stronger outlook was driven by the rising vaccination rates and the prospect of lockdowns easing across the region, as well as improving export demand driven by a global rebound. Brussels for the first time fully factored in the impact of the €800bn Next Generation EU economic relaunch package, which is expected to begin paying out in the second half of the year.

“The shadow of Covid-19 is beginning to lift from Europe’s economy,” said Paolo Gentiloni, the EU’s economics commissioner. “After a weak start to the year, we project strong growth in both 2021 and 2022. Unprecedented fiscal support has been — and remains — essential in helping Europe’s workers and companies to weather the storm.”

Europe slid into a double-dip recession early this year amid renewed lockdowns and a shaky start to the vaccination effort. However, evidence has been mounting more recently that the economy has “moved up a gear”, according to the commission, which cited improved business and consumer sentiment surveys.

Further easing of containment measures combined with the early payouts from the recovery fund should mean economies would accelerate in the third quarter — including those with big tourism sectors, which should benefit from the return to “quasi-normality of social activities over the summer”, according to the commission.

Stronger global growth, driven in part by the US stimulus packages and improved growth in China, will also help lift the EU’s export sector and contribute to the recovery. The broader EU economy will grow 4.2 per cent in 2021 and 4.4 per cent in 2022, according to the forecast, also an upgrade from the February outlook. The bloc’s unemployment rate will hit 7.6 per cent this year before heading back down to 7 per cent in 2021.

Spain, which was the hardest-hit EU economy last year, losing more than a tenth of its output, will grow 5.9 per cent in 2021 and 6.8 per cent in 2022, according to the new outlook. Italy is set to expand by 4.2 per cent this year and 4.4 per cent next.

Germany, which suffered a much smaller 2020 contraction, could grow 3.4 per cent in 2021 and 4.1 per cent in 2022. France is tipped to expand by 5.7 per cent this year and 4.2 per cent next.

The outlook next year will be supported by the highest public investment levels as a share of gross domestic product in more than a decade. That will be driven in part by the Next Generation EU package, which is meant to start paying out in the summer once member states get their recovery plans signed off by the commission.

In total, the six-year programme should pay out about €140bn of grants over the two years covered by the commission’s forecasts. That should deliver a 1.2 per cent of GDP uplift, according to the outlook.

The crisis will still continue to exert a massive strain on public finances, however, with the overall eurozone deficit set to rise to 8 per cent of GDP this year. That is predicted to halve next year to 4 per cent, but the legacy of the vast government spending programmes will still loom large. The overall euro area public debt-to-GDP ratio will remain above 100 per cent this year and next, the commission said.

EU member states face a tense debate later this year over how to rapidly pare back their stimulus programmes and whether to reform the bloc’s fiscal rules, which are set to remain suspended until 2023.

Among the risks to the outlook, the commission said, was the possibility that governments would decide to start paring back their economic support packages too soon, undermining the recovery. The continued effectiveness of vaccines and the evolution of the pandemic will also play a critical role in determining whether the EU’s upgraded forecast proves justified.



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No, ‘hyperinflation’ is not here

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There’s a lot of concern out there about inflation right now. Including, unsurprisingly, here in Germany. And where not just talking about the Bund yield. This is this morning’s hot take from state broadcaster ZDF:

For non-German speakers, the headline reads ‘Fear of hyperinflation’.

The article is not entirely unreasonable, focusing on the pressures we’ve seen build up in producer prices over the course of the pandemic. As markets this morning are all too aware ahead of an important US print Wednesday, we are likely to see broader consumer price inflation surge in the coming months.

We’re betting that it’ll be a temporary blip. Round about this time last year, the West Texas Intermediate oil contract went sub zero. Twelve months on, we were always likely to see some dramatic CPI readings simply as a result of the slump in price pressures that happened when the pandemic first struck.

To boot, take away stimulus cheques and furlough schemes, and the labour market on either side of the Atlantic is nowhere near strong enough to trigger the sort of wage-price spiral that saw inflation surge into the double digits in the US and UK in the 1970s. Even in Germany, where manufacturing unions are still relatively strong, companies like Volkswagen say they don’t need to pay their workers more. Those are workers who did not get a pay rise in 2020, nor will they get one this year either — though they will see a 2.8 per cent bump from 2019 levels in 2022.

But our main point is this: Even if the price pressures seen in supply chains do spread more widely, and even if higher CPI readings do endure, raising the spectre of hyperinflation — which conjures up the cash-in-wheelbarrows images witnessed in the 1920s to many here — is completely overblown.

The article itself notes that hyperinflation is a phenomenon where prices shoot up by more than 50 per cent. We’re nowhere near that sort of situation — even over the next few months inflation readings are likely to remain in the single digits. To suggest otherwise is nothing short of scaremongering.



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The EU is trailing China’s trade distortions all round the world

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This article is an on-site version of our Trade Secrets newsletter. Sign up here to get the complete newsletter sent straight to your inbox every Monday to Thursday.

Hello from Brussels, and welcome to the first edition of the new and improved Trade Secrets.

We’re still feeling the reverberations from the US’s announcement last week supporting, in principle, a patent waiver for Covid-19 vaccines at the World Trade Organization. The EU’s incredibly indignant that it’s been outspun and made to look like the bad guy, and is letting everyone know about it. The problem is that, being the EU, it’s unable to convey a quite simple and entirely reasonable message — it’s fine to talk about patents, but tech transfer and exports are the main thing — without a bit of a cacophony and strange references to Anglo-Saxons.

The babble managed to overshadow some quite big news at the EU-India summit over the weekend. As the Financial Times predicted last week, Brussels and Delhi launched (or technically renewed) talks on a trade deal, plus ambitious notions about co-operating on digital connectivity, geopolitics and so on, plus an investment treaty of the kind that’s gone down so well since the EU signed it with China. Speaking of which, today’s main piece is on the EU’s determined campaign to create legal tools to take on Chinese trade distortions, complicated by the fact that the problem keeps changing shape.

Charted Waters takes a look at trade flows over the past decade.

We want to hear from you. Send any thoughts to trade.secrets@ft.com or email me at alan.beattie@ft.com

New answers to the ever-changing China question

There’s been a finely tuned humming heard around Brussels over the past few years, like a high-performance engine being run at speed. It’s the legal brains of the European Commission designing new “autonomous” (unilateral) tools to counter what the EU regards as the unfair trade and investment distortions produced by Chinese state capitalism. (They don’t say China, but that’s what they mean.)

Whether you support the campaign’s underlying philosophy — free-traders are sceptical about it — the process is impressive to watch. Frankly, we wouldn’t want the lawyers of the trade and competition directorates after us. The latest contrivance was wheeled out of the hangar last week, in the form of a subsidies instrument to be used against state-supported foreign companies operating in the EU.

Assuming it gets adopted, and depending on how it’s used, it’s a big deal, bringing competition tools to bear on international trade. Essentially, it extends the reach of the EU’s state aid regime abroad where foreign handouts distort the European market. It can be applied to market competition, mergers and acquisitions, and public procurement. 

The anti-subsidy tool is the latest in the following list of China-unfriendly initiatives implemented or proposed by the EU over the past five or so years. If you’re taking notes: sharpening up trade defence instruments (anti-dumping and anti-subsidy duties); allowing those duties to be used against companies subsidised by the Chinese government but exporting from another country; tightening up screening of inward foreign direct investment (FDI) for national security reasons; developing an anti-coercion tool (aimed more at Donald Trump’s administration, to be fair) to use against foreign governments acting illegally; producing a toolbox for member states to manage risky entities (Huawei) from 5G networks; banning imports made with forced labour; and requiring European companies to exercise “due diligence” in eliminating labour and environmental abuses from their supply chains. Quite a list.

You have to admire the commission’s stamina and ingenuity, finding ways to tackle one alleged distortion after the other. You’d also think that, what with China and the EU becoming ever closer trading partners, Brussels’ stance would somewhat rattle Beijing. But it’s hard to conclude that the EU’s tools, along with a bunch of similar actions by the US and other countries, have pushed the Chinese growth model towards a market economy. In fact, President Xi Jinping’s going the other way, with a “dual circulation” growth strategy, one of the aims of which is to use heavy government intervention to build up high-tech capacity in China in an insulated domestic market.

Why? Well, some of the explanations are political. These tools are housed in the commission, but some require EU member state acquiescence to create and/or use. Powers over national security FDI and 5G screening, for example, reside at national level: China can pick off individual countries with carrots and sticks. 

Some explanations are institutional. The ability to use anti-dumping and anti-subsidy duties against Chinese companies based in third countries has been tried just a few times (glass fibre fabric and reinforcements from Egypt and steel from Indonesia and India) and only partially succeeded. Antidumping lawyers grumble that the commission makes it too hard to bring new cases.

Some are practical. The subsidy instrument will involve complex investigations, trying to apply existing EU state aid disciplines to the myriad opaque ways that China hands out money to its companies. The thresholds for action also have to be set high enough not to deter benign investments, especially since a foreign business attempting to acquire a company in the EU may also have to file separate national FDI notifications.

But one of the hardest issues is that the creation of the instruments generally lags behind the evolution of the Chinese trade and growth model by a few years. While Europe’s trade defence tools were being strengthened against exports from China, Beijing was instead building industrial capacity abroad through the Belt and Road Initiative. Then, just as the EU started to apply those duties against Chinese companies outside China, Beijing was rethinking the Belt and Road Initiative and reducing its foreign exposure. The subsidy tool arrives several years after Chinese FDI into the EU started falling and many European governments became disenchanted with China. You can very plausibly argue the EU now needs more rather than less Chinese FDI.

As the EU-China Comprehensive Agreement on Investment shows, China is less interested in getting market access in the EU than securing European inward investment in intellectual property-intensive sectors such as electric vehicles, and we can guess what for. The agreement has provisions to prevent forced technology transfer, and the EU has brought cases on the issue at the WTO, but winning dispute settlement cases rather than wielding a unilateral tool is a slow and uncertain business.

This isn’t a counsel of despair: there are still plenty of Chinese exports and investment in the EU that can be regulated, assuming that’s a good idea. But the EU’s critiques of the latest phase of Chinese development — dominating advanced markets through huge government support and weaponising trade for geopolitical ends — will be even harder to address than the previous ones. And that’s before we get to the question of human rights.

We’ll take a deeper look at the EU’s anti-subsidy initiative in future newsletters: there’s a lot to examine. For now, we’ll just say that there’s been a lot of painstaking legal engineering going on, but the devices that result are already looking a little dated.

Charted waters

This is about as big a picture on global trade as you can get. The data, from the CPB Netherlands Bureau for Economic Policy Analysis, track trade flows over the past ten years and show two things.

Line chart of 2010=100 showing World trade has recovered from the pandemic, but not Trump

First, the good news (for those of you who are fans of globalisation at least). The recovery from the early months of the pandemic has been remarkable, with flows now at their pre-Covid mark.

This is a point that we don’t think is made often enough. While semiconductor chip shortages and high shipping costs often make headlines (including, we confess, in Trade Secrets), global manufacturing and logistics should be given an awful lot of credit for ensuring that the rebound seen over the past three quarters has been so strong.

The bad news is that broader geopolitical tensions were clearly affecting flows in the run-up to the pandemic. We don’t see those tensions dissipating soon, so expect growth to stutter even if we manage to get Covid under control. Claire Jones

Trade links

Welcome to our new Trade Links section, a round-up of the best content we’ve come across over the past few days.

Today’s must-read comes from the European Centre for International Political Economy and covers the trade implications of the radical shift in technology turning manufacturing giants, such as Volkswagen, into software developers. It’s well written and has some great charts that help support the case that, when it comes to trade and technology, the future is now. 

We’d highly recommend this FT piece, which takes an in-depth look at why the Serum Institute of India, the world’s top vaccine maker, is struggling. One of the reasons being that it’s at the sharp end of the vaccine trade wars. Also worth a look is this Big Read from Andrew Hill, explaining why the UK’s services sector is taking a big hit from Brexit. This is a massive deal. And — as Lionel Barber, formerly of this parish, notes — it is a story too few are talking about given that services makes up a whopping 80 per cent of UK output. Expect this to change, and the services sector’s woes to rise in prominence, as economies on both sides of the Channel begin to reopen. 

This morning’s edition of the FT’s excellent Europe Express newsletter focuses on the transatlantic spat over the vaccine waiver, which Mehreen Khan concludes will do little to help poorer countries in desperate need of more jabs. For those of you interested in European policy and politics beyond trade, sign up here for a daily guide to what’s driving the European agenda, available for premium subscribers Monday to Friday at 7am CET. Nikkei Asian Review looks at ($ — subscription needed) why bureaucratic timidity led to the withering of Japan’s pharmaceuticals industry, leaving it reliant on foreign countries for vaccine supplies. For fans of the chip story (who isn’t?), Nikkei has dug into how Korean electronics group Samsung lost its lead to Taiwanese chipmaker TSMC. 

Elsewhere, the International Economic Law and Policy Blog asks what if the US can’t create consensus around a vaccine waiver. (There are some interesting recommendations for further reading in the comments too.) This week’s Economist delves into the topic ($) of vaccine donations. While Covax has made almost 50m vaccination donations, this is well short of its target. One of the reasons for that being the tragedy unfolding in India. China, meanwhile, has doled out 13.4m doses to 45 different countries, and India more than 10m vaccines. Alan Beattie and Claire Jones 

Any recommendations on articles to include in Trade Links? Send your tips here.

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