How much damage will the new lockdowns inflict on the UK economy?

Tougher restrictions around Britain will inevitably delay recovery, says Hamish McRae

Getting back to the ‘new normal’ will take some time, but it will happen (Getty Images)

The recovery will be postponed. The most important impact of the new and severe lockdowns across London and southeast England will be the human one. But there will be serious economic consequences too, and economic misery will add to the human toll in all sorts of ways. What can we say about that?  

The starting point is very simple. There can be no sustained recovery until the most vulnerable people have been vaccinated. Until that death rate goes down, there will be no general reopening of the hospitality and entertainment industries that have been most seriously hit. We will have a first quarter of the year under varying levels of restrictions, the effects of which can be only partly mitigated by government action. Whether this turns out to be a quarter of negative growth or not, this will feel like a double-dip recession. The businesses that have boomed through the past year will continue to do well, and those that have shattered will be trying to hang on somehow.  

On the other hand we know that when restrictions are lifted the economy races back. We saw that in the summer with the “Eat Out to Help Out” project, and they are seeing it now in Wuhan, which after months of total lockdown has become party central. So we can be very confident that the recovery, when it is allowed to come, will be a strong one.