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

Experts predict further GDP fall of up to 10%

A pedestrian wearing a protective face mask walks past the the Bank of England in the City of London
(Image credit: Simon Dawson/Bloomberg via Getty Images)

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.

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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.

 
Chas Newkey-Burden has been part of The Week Digital team for more than a decade and a journalist for 25 years, starting out on the irreverent football weekly 90 Minutes, before moving to lifestyle magazines Loaded and Attitude. He was a columnist for The Big Issue and landed a world exclusive with David Beckham that became the weekly magazine’s bestselling issue. He now writes regularly for The Guardian, The Telegraph, The Independent, Metro, FourFourTwo and the i new site. He is also the author of a number of non-fiction books.