UK economy hits reverse on virus curbs

by Roland JACKSON

Britain’s economy slumped 2.6 percent in November on coronavirus restrictions, official data showed Friday, stoking fears that the current virus lockdown could spark a double-dip recession.

Gross domestic product hit reverse after 0.6-percent growth in October, the Office for National Statistics said in a statement, adding the economy was 8.5 percent smaller than its pre-pandemic level in February.

England was placed in partial lockdown in November as the government raced to curb spiking Covid-19 infections, while there were also restrictions in Wales, Scotland and Northern Ireland.

Curbs were then eased in the run-up to Christmas.

“The economy took a hit from restrictions put in place to contain the pandemic during November,” said Darren Morgan, ONS director for economic statistics.

“However, many businesses adjusted to the new working conditions during the pandemic, such as widespread use of click-and-collect as well as the move online.

“Manufacturing and construction generally continued to operate, while schools also stayed open, meaning the impact on the economy was significantly smaller in November than during the first lockdown.”

The downturn also came ahead of Britain’s final divorce from the European Union at the end of December when it formally left the EU’s single market and customs union.

Double dip recession fears
England and Scotland went back into a weeks-long lockdown this month, similar to the first national coronavirus curbs in place from March to June, as the UK government sought to halt a variant Covid-19 strain that is said to be more transmissible.

Economists warn that current restrictions could spark a double-dip recession, after the economy slumped into a historic downturn last year on the back of the initial strict lockdown.

“With lockdowns across the UK back in place and set to last until at least mid-February… the economy will have a challenging start to 2021 and will experience clear contraction in the first quarter,” EY economist Howard Archer said.

“The forecast is for a first quarter decline in GDP in the region of 3.0-4.0 percent quarter-on-quarter. This would result in a double dip recession,” he added.

British finance minister Rishi Sunak meanwhile echoed his remarks from last week when he declared that the economy would worsen before any recovery takes hold.

Sunak also expressed optimism due to the rollout of vaccines and the government’s virus stimulus policies, including its furlough jobs support scheme that pays the bulk of private sector wages until April.

Reasons to be hopeful
“It’s clear things will get harder before they get better and today’s (GDP) figures highlight the scale of the challenge we face,” Sunak said on Friday.

“But there are reasons to be hopeful — our vaccine rollout is well underway and through our Plan for Jobs we’re creating new opportunities for those most in need.

“With this support, and the resilience and enterprise of the British people, we will get through this.”

Britain has been the European nation worst hit by the devastating pandemic with a death toll of more than 86,000.

The government is pinning its hopes on a mass vaccination drive, which has so far seen around three million people inoculated.

© Agence France-Presse