A second lockdown will push the economy into another nosedive and cause a double dip recession, experts warned.
Tighter coronavirus restrictions will cause the nation’s already fragile economy to spiral, with economists forecasting a shrink of up to 8 per cent GDP in the final-quarter of 2020.
It comes as it emerged the Prime Minister will not address the Confederation of British Industry (CBI) meeting for only the second time in its 55 year history.
The annual conference takes place today, 48 hours after the announcement that much of the economy would shut down in a bid to halt the spread of the virus.
The UK announced 23,254 more Covid cases and 162 deaths yesterday – the highest Sunday rise since May 24 – as a second coronavirus wave engulfs the UK.
Boris Johnson is expected to send Business Secretary Alok Sharma to address business leaders in his place.
Prime Minister Boris Johnson will not address the Confederation of British Industry meeting for only the second time in its 55 year history, instead sending Business Secretary Alok Sharma in his place
Business Secretary Alok Sharma (left) is set to attend the CBI meeting today after the organisation’s president Lord Bilimoria (right) announced the PM would notbe speaking at the meeting
The president of the organisation, Lord Bilimoria, told BBC Radio 4’s Today programme: ‘It is absolutely normal, in the history of the CBI, for the Prime Minister of the day to address the annual conference.
‘To my knowledge this has only not happened once in history.
‘He is not going to be addressing us this morning.
‘However, we are hopeful that at some stage he will engage with us.’
Business leaders are desperate to hear reassurances from government amid rising uncertainty over the future of the economy.
These are said to include a road map out of a second lockdown and assurances about a Brexit deal before the end of the year.
The latest data published by the Office for National Statistics suggests the UK’s V-shaped recovery from the coronavirus crisis is slowing
Economists have said the nation faces a double dip recession as the country is plunged into lockdown for a second time.
They forecast that the national output was likely to contract by between 5 and 8 per cent in the final months of 2020 after recovery seen over the summer.
Howard Archer, chief economic adviser to economic forecaster the EY Item Club, told The Times: ‘There seems little doubt a renewed national lockdown will cause the economy to contract in the fourth quarter — and very possibly by an appreciable amount.’
The warnings come at a time when businesses borrowing it at an all time high and the aviation and travel idustry is on its knees as another travel ban is introduced.
The EY Item Club research also found that net borrowing from banks rose to £43.2bn between January and August from £8.8bn for 2019.
This is a fivefold increase compared to figures from last year.
CBI’s director general Dame Carolyn Fairbairn has said a second UK lockdown spells ‘a real body blow for business’, while the next weeks should be used ‘to prepare for what might come’
CBI’s outgoing director-general Dame Carolyn Fairbairn yesterday said a second lockdown was a ‘real body blow’ for the economy.
She added that the next four weeks should be used ‘to really prepare for what might come next’, as salons, gyms and the hospitality industry are set to close their doors once more.
She said: ‘We need to do everything we can to minimise the damage of the second lockdown.
‘We need to keep as much of the economy open as we possibly can and actually, because more businesses are Covid safe now, manufacturing, construction should be able to stay open.
Treasury confirms grants available for businesses which are forced to close
The Treasury announced that, alongside the extension of the furlough scheme, businesses which are forced to close in England can receive grants of up to £3,000 per month, while local authorities will be given £1.1 billion for one-off payments to firms in their areas.
Homeowners will also be able to take the option of mortgage payment holidays, which had been due to end on Saturday but have been extended.
Chancellor Rishi Sunak said: ‘Over the past eight months of this crisis we have helped millions of people to continue to provide for their families. But now – along with many other countries around the world – we face a tough winter ahead.
‘I have always said that we will do whatever it takes as the situation evolves. Now, as restrictions get tougher, we are taking steps to provide further financial support to protect jobs and businesses. These changes will provide a vital safety net for people across the UK.’
‘The fact that we have schools open is really fundamental because people can go to work.
‘We do need to protect jobs and the economy and the fact that we have got the job retention scheme, the furlough, continuing is really, really fundamental.’
Dame Fairburn will warn in a speech on the opening day of the conference today that young people have been particularly hard hit by the recession, with the havoc wreaked by Covid potentially creating a ‘lost generation’.
She will recommend the creation of a National Commission for Economic Recovery, bringing together business, government, unions, education and other parts of civil society, and call for work to start before the pandemic has come to a close.
Announcing the lockdown on Saturday, the Prime Minister described the pandemic as ‘a constant struggle and a balance that any Government has to make between lives and livelihoods, and obviously lives must come first’.
He said: ‘I’m under no illusions about how difficult this will be for businesses which have already had to endure such hardship this year and I’m truly, truly sorry for that – and that’s why we’re going to extend the furlough system through November.
‘The furlough system was a success in the spring, it supported people in businesses in a critical time. We will not end it, we will extend furlough until December.’
The draconian measures – being billed as ‘Tier Four’ on the government’s sliding scale – come into force from midnight Thursday morning after bleak Sage modelling projected the virus could kill 85,000 this winter, far above the previous ‘reasonable worst case’.
The brutal squeeze will see non-essential shops in England shut until December 2, as well as bars and restaurants despite the ‘absolutely devastating’ impact on the already crippled hospitality sector.
Cabinet Office Minister Michael Gove revealed the restrictions could be extended beyond the December 2 deadline if the R rate does not fall.
It emerged earlier this month that the UK economy grew by just 2.1 per cent in August as the recovery from the pandemic’s impact stalled despite Rishi Sunak’s Eat Out to Help Out scheme – down on the 6.4 per cent expansion recorded in July.
The economic upturn was losing steam in the face of regional lockdowns and rising unemployment, but now forecasters are warning that the economy will dip again after the sharp recovery over the summer months.
Business leaders warned of the dire consequences of a second lockdown on their balance sheets and their staff.
GVC, the betting group behind Coral and Ladbrokes, has warned it could take a profit hit of £34 million if all its high street betting stores are forced to close for the entire month.
The company said the impact from closures in other UK regions will be £27 million, and £10 million from the closure in other European countries already experiencing their own second lockdowns.