European Directions: Contact tracing to the rescue?

By Peter Schaffrik and Gordon Scott
Published May 15, 2020 | 1 min read

As new coronavirus case numbers are falling across Europe, a number of European countries are beginning the long, slow process of lifting restrictions on economic activity and restarting their economies. Although the process is uneven, with mobility data we can see that some countries are making more progress than others.

Required Conflicts Disclosures


Dangers of a second wave remain

Naturally, a crucial question for markets is the extent to which it is possible to restart economic activity without allowing a second wave of infection. In this research report, we introduce a framework to begin answering this question. Working together with RBC Elements, RBC’s data science team, we build on academic research to model, Rt, the instantaneous reproductive number, for six European economies.

Historical data suggests a strong relationship between economic activity and infection rates. To date, there has been a strong positive correlation between lagged movement (as measured by mobility data from Apple) and Rt – i.e. as movement increases so does the rate of spread of the virus. Were this pattern to continue, it would be extremely difficult for European economies to continue to open up without allowing a second wave of infections.


Shifting strategy

Contact tracing may weaken the link between movement and infection.  European governments are taking a number of measures to try to break the link between increased economic activity and spread of the virus, by changing their response to the so-called ‘test, trace, isolate’ strategy. We find evidence that where employed in Asia, these measures have proved to be highly successful.


Looking for a structural break

We expect that going forward there will be a structural break in the relationship between mobility and infection rates in Europe, with the correlation between mobility and Rt converging toward the low levels seen in Asia. Were, however, this not to occur, the risks of a second wave of infection would likely be greatly increased and markets would react very negatively.

To view the full research report which includes analytical framework to monitor the situation closely, please click here.

For Required Conflicts Disclosures, click here. These disclosures are also available by sending an email to

Peter Schaffrik and Gordon Scott