In Brief

Second lockdown will plunge UK into ‘double-dip’ recession, economists warn

Experts predict further GDP fall of up to 10%

The looming lockdown for England will undo the economic progress made over the summer and push Britain into a double-dip recession, according to revised forecasts from leading economists.

Back in April, the first full month of the first lockdown, the UK economy shrank by a record 20.4%. Now, experts are warning that the tighter restrictions announced by Boris Johnson on Saturday will “obliterate the country’s fragile economic recovery”, The Times reports.

Many are predicting that the final-quarter GDP will shrink by as much as 8%. And Gerard Lyons, an economic adviser to Johnson when he was London mayor, told The Guardian that the contraction could be as high as 10%.

Howard Archer, chief economic adviser at forecasting group EY Item Club, agrees that there is “little doubt” a new national lockdown will “cause the economy to contract in the fourth quarter and very possibly by an appreciable amount”. Paul Dales, economist at Capital Economics, added: “The recovery has been quite good and we were making progress but it will go into complete reverse in a short while.”

Bank of England policymakers are expected to agree to inject up to £100bn into the economy when they meet this week. The nine-strong Monetary Policy Committee (MPC) was already poised to announce “gloomier economic forecasts” even before the prime minister announced the drastic tightening of restrictions to tackle rising Covid-19 infection rates, The Guardian reports.

The MPC is said to favour quantitative easing to stimulate the economy - a process in which the Bank creates a form of electronic money that can be used to purchase UK government bonds.

Government borrowing from April to September was nearly four times the £54.5bn borrowed in the whole of the last full financial year. Meanwhile, debt has already hit £2.06trn, equivalent to 103.5% of GDP and a 60-year high.

Recommended

Is Facebook about to change its name?
Mark Zuckerberg
Behind the scenes

Is Facebook about to change its name?

‘Boris Johnson resorting to moral blackmail on green policies’
Boris Johnson leaves Downing Street
Instant Opinion

‘Boris Johnson resorting to moral blackmail on green policies’

London house prices hit record high of £525,893 in August
City of London aerial view
In Focus

London house prices hit record high of £525,893 in August

Is it worth switching your gas boiler to a heat pump?
Boris Johnson
Why we’re talking about . . .

Is it worth switching your gas boiler to a heat pump?

Popular articles

The tally of Covid-19 vaccine deaths examined
Boy receiving Covid vaccine
Getting to grips with . . .

The tally of Covid-19 vaccine deaths examined

Insulate Britain: what do they want?
Insulate Britain protesters
Profile

Insulate Britain: what do they want?

What is blackfishing?
Shot of Jesy Nelson with her hair in braids
In Depth

What is blackfishing?

The Week Footer Banner