Britain is headed for a sharper double-dip recession after Prime Minister Boris Johnson plunged the nation back into a lockdown with no clear end. Restrictions will be in place in England until at least February 15. Economists said the action, announced Monday to prevent the health service from being overwhelmed by surging coronavirus infections, all but certainly means the UK economy will shrink in the first quarter. That will delay the recovery from the worst downturn in three centuries, which analysts say already was unlikely before 2023. Chancellor of the Exchequer Rishi Sunak announced $6.2 billion of emergency support to help UK businesses survive. “This will help businesses to get through the months ahead — and crucially it will help sustain jobs, so workers can be ready to return when they are able to reopen,” Sunak said.
In a video message on Twitter, he said the budget in early March will “set out the next stage in our economic response.” Retail, hospitality and leisure businesses will be entitled to one-off grants of as much as £9,000 to tide them over until the spring, the UK finance minister said. That’s on top of existing funds of as much as £3,000 per month for those required to shut their doors because of coronavirus restrictions. Closing schools means this hit will be worse than the restrictions imposed in November, according to Bloomberg Economics. “This is bad,” Ludovic Subran, chief economist at Allianz SE said in a Bloomberg Television interview. “The UK is a service economy, so it’s all about shutting down services, and it’s bad because things like schools are a big part of GDP. Also because they play a role in how much parents are able to work.” The government’s measures add to the £280 billion it has cost the Treasury to tackle the virus and support firms and workers through the pandemic.