The UK economy could take a £30billion hit and see a worsening of supply shortages if the Government imposes another lockdown, economists have warned.
Boris Johnson has vowed that Britain will not be plunged into another full lockdown, but has refused to rule out a ‘Plan B’ option featuring ‘light touch’ measures, such as vaccine passports, masks and working from home.
Panmure Gordon chief economist Simon French said: ‘The unlikely but unofficial Plan C is a full lockdown, if a vaccine-beating variant emerges. That would knock the bottom out of commuter hubs and cause even more problems with supply chains as people switch away from spending on services and towards buying products.’
Signing off: Boris Johnson has vowed that Britain will not be plunged into another full lockdown, but has refused to rule out a ‘Plan B’ option
French forecasts seven per cent growth in GDP – about £140billion – for 2021 if the Covid situation does not worsen. He said a Plan B approach would hit spending on businesses from cinemas to hairdressers, knocking up to £10billion off output, and a hard lockdown similar to the first three months of the year could cost £30billion.
Neil Shearing, group chief economist at Capital Economics, said: ‘The economy has become more resilient to lockdowns and the impact will be milder than with the first lockdown.’
GDP plummeted by 20.4 per cent in the second quarter of 2020 – during the UK’s toughest lockdown – but dropped by only 1.5 per cent in the first quarter of this year.
Nomura chief UK economist George Buckley does not expect the economy to return to pre-pandemic health until next spring.
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