British Prime Minister Boris Johnson has ordered England back into lockdown to slow the spread of Covid-19, a move that will weigh on the country's budget deficit and its 2 trillion-pound debt mountain, and probably cause the economy to shrink again.
Below are comments from analysts about the expected impact of the lockdown on the economy.
JP Morgan
- Britain's budget deficit will hit 20% of gross domestic product - twice its peak after the global financial crisis - with the extra stimulus costing over 20 billion pounds.
- GDP contracts by 1.5% in the fourth quarter, a much smaller quarterly hit than a crash of nearly 20% in the April-June period which covered the first lockdown, largely because Britain's economy is still 9% smaller than before the pandemic
- Also softening the hit this time: no closure of schools, manufacturing and construction firms asked to stay open, better preparedness by firms not asked to close, and households better positioned to use online services and work from home.
Deutsche Bank
- November GDP will probably plunge by a monthly 6% to 10%; fourth-quarter GDP is likely to drop by between 2.5% and 3.5%.
- The Bank of England is now likely to increase its bond-buying programme by 100 billion pounds at the end of its November meeting on Thursday. Deutsche Bank had previously expected an increase of 60 billion pounds.