As the U.K. Lockdown Arrives, Officials Work to Keep the Economy Afloat

Prime Minister Boris Johnson has said this lockdown would last only until Dec. 2, but there are expectations, even within his own cabinet, that after this date, England will be under severe restrictions. On Sunday, Michael Gove, a senior cabinet minister, acknowledged that the measures — which require people to stay at home unless they need to leave for work, education or essential shopping — could be extended beyond a month.

“It would be foolish to predict with absolute certainty what will happen in four weeks’ time, when over the course of the last two weeks its rate, its infectiousness, its malignancy have grown,” Mr. Gove said.

In the spring, Britain shuttered businesses and much of its economy later than some of its neighbors, and in the end had a longer lockdown and one of Europe’s worst recessions in the second quarter. Some politicians and economists fear that Britain is repeating this error. Opposition lawmakers had pushed for a shorter nationwide lockdown weeks ago but the government persisted with local restrictions instead.

But the situation in the European Union — Britain’s main trading partner — has also deteriorated. A second wave of the pandemic is “dashing our hopes for a quick rebound,” Valdis Dombrovskis, the European Commission executive vice president, said on Thursday. The commission produced new economic forecasts for the bloc showing the recovery weakening. Meanwhile, a landmark 750 billion euro ($883 billion) stimulus package is stuck in negotiations, and the loans and grants will not be distributed until next year.

The latest stimulus measures cover the period when Britain will separate from the European Union. In line with the government’s official policy, the Bank of England assumes that there will be a free-trade agreement between Britain and the bloc. But its forecasts expect trade disruption to reduce economic growth by one percentage point in the first quarter of 2021, as many businesses still aren’t prepared for a new trading arrangement.

Article source: https://www.nytimes.com/2020/11/05/business/britain-economy-lockdown-virus.html