COVID-19 impacts regional disparities

November 2021

The impacts of the COVID-19 pandemic risk to widen territorial inequalities in Europe. These increase when going beyond measurable indicators and looking at different types of territories.

The diversity of European cities and regions translates into different impacts from COVID-19 and varied approaches to managing recovery. As the impacts of the pandemic on local and regional development vary, existing disparities risk also being deepened. In many regards the pandemic has accelerated fragmentation processes between regions, cities, neighbourhoods, groups of society and people in Europe. Convergence in the EU may been reversed.

At the same time, the pandemic shows that European regions and cities are tightly interwoven in networks of mutual interdependencies. What happens in one place affects developments in other places.

The pandemic has also illustrated the mismatch between administrative borders and the spatial patterns of people´s everyday life – at local, regional and national alike. To start with, the spreading of infections follows functional interactions and geographies rather than administrative delineations. Furthermore, the mismatch was evident in the disruptive effects of closed regional and national borders had on integrated labour markets and the provision of services of general interest, especially healthcare.

In a recent study to the European Committee of the Regions we have analysed some of the short- and medium-term impacts of the pandemic. The study incl. all the details of the points only touched upon in this blog text, is available here (Öffnet in neuem Fenster). First results are already published in the 2021 EU annual regional and local Barometer (Öffnet in neuem Fenster).

Short-term impacts

Short-term impacts vary considerably across European regions. This is only to some degree linked to the level of restrictions in a place. The socioeconomic structure of a place is much more important as it decides how hard the restrictions hit the population and businesses. This concerns both restrictions in the place itself as well as restrictions in other places, which implied that e.g. tourist could not come, supply chains were interrupted or demand for goods and services stalled.

Regions potentially hit hardest are mainly in southern Europe, especially Greek regions, the Spanish regions of Extremadura, Catalonia and Andalucía, the Balearic Islands and the Portuguese regions of Algarve and Norte. The pandemic has also a range of social impacts concerning people’s wellbeing and quality of life. In many regards, the economic disruption caused by COVID-19 inevitably threatens the most vulnerable groups of society more.

Medium-term impacts

As hopefully the pandemic loses some of its interruptive character in many cases the impacts will be felt for some years to come and recovery will differ between places. The more durable impacts on some sectors and structural elements, which affect how quickly an area can recover, will shape the diversity of medium-term impacts.

Some of the factors which will affect a places medium-term impacts are the importance of the tourism sector (see also earlier blog post (Öffnet in neuem Fenster)), the share of employment in the accommodation sector, employments in arts and cultural activities, the share of young people without occupation, the share of people with low education levels, the risk of poverty, and the quality of government.

Analysing these indicators, the regions which are expected to struggle for longer are East Macedonia & Thrace, the Ionian islands and South Aegean in Greece, the Canaries in Spain, the Aosta Valley, Liguria and Sardinia in Italy and Madeira in Portugal. These are followed by the remaining Greek and Italian regions, Croatia, Cyprus, Malta as well as most Bulgarian, Romanian and Irish regions, as shown in the above map.

However, by the end of the day, the medium-term effects will largely depend on the imprint the pandemic leaves on behaviour. Socioeconomic developments are strongly influenced by behavioural changes and restrictions, e.g. in terms of tourism, online shopping, housing in urban areas.

Still, it is widely expected that the macro-geographical trends of the past decades will continue. The pandemic will neither end nor soften polarisation and fragmentation between societal groups and places but rather accelerate these trends. Severe inequalities, geographies of discontent and places left behind will be with us for a foreseeable future. This could mean the divides between cities and regions that prosper and those that struggle will remain, and possibly even widen.

Looking at the bright side

The COVID-19 pandemic and its impacts pose major challenges to regional and economic development. Nevertheless, for some businesses the pandemic also brought new opportunities. Regions that could capitalise on economic opportunities from the crisis vary considerably. They generally faced fewer restrictions and their socioeconomic profile made it easier to adjust. This includes areas with many jobs in the information and communication (ICT) sector or people working from home prior to the pandemic. Examples are regions in Benelux and Nordic countries, as well as in Slovakia, Poland, Hungary, the Czech Republic, and Southwestern Bulgaria.

Nevertheless, although some places and businesses experienced positive impacts of the pandemic, these do not balance the negative impacts.

Looking forward

To what degree the potential impacts and their effects on cohesion will materialise depends on the recovery processes and local and regional resilience. For both outlooks vary considerably. In particular regions heavily depending on tourism might need several years to recover from the impacts of pandemic. Also more remote (and sparsely populated) rural areas might face lasting challenges from the pandemic, at least concerning the boom in digitalisation it brought about.

At a societal level, the pandemic has brought underlying value conflicts in our societies to the surface. The dominance of global and open approaches has been broken, it seems. Even in discussions about desirable futures, regressive views have increased. This reflects also in a decrease of trust – in institutions and people. Trust in others is a key element of all our economic and governance systems and a key feature unleashing development potential.

In terms of resilience, it is important to focus on the ability to reorganise rather than to ‘bounce-back’ and be better prepared for future shocks. While the COVID-19 pandemic stands for a past shock, other shocks are announcing themselves. Climate change, loss of biodiversity and increasing societal inequalities are expected to bring about much more severe shocks than the COVID-19 pandemic, as we discussed in an earlier blog post (Öffnet in neuem Fenster).

by Kai Böhme