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UK now set to see first double dip recession since 1975

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The UK is likely to experience its first double-dip recession since 1975 as the UK’s third lockdown begins today. The Centre of Economics and Business Research (CEBR) has forecasted that the latest lockdown is expected to cost almost £400million per day.

Output in the first quarter of 2021 will be £24.57billion lower than it would have been without the third national lockdown the CEBR have warned. CEBR is predicting that if the lockdown is lifted in mid-February, as Prime Minister Boris Johnson has indicated, it will have cost the UK £390million for every working day between now and then.

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Although the economy is expected to pick up later as the rollout of the Covid vaccine allows the reopening of restaurants and shops amongst other things. However, Howard Archer, of the EY Item Club economic forecasting group, had previously pencilled in growth of 6.2 per cent for 2021. But now, given the lockdown in place at the start of 2021, he has slashed his predicted growth to 5.5 per cent. Mr Archer has said: ‘With restrictions now in place in most areas of the UK, the EY Item Club expects the economy will have a challenging start to 2021 and will likely see modest contraction in the first quarter. This would result in a double dip recession’. 

A recession is two consecutive quarters of economic contraction. A new recession would be the UK’s first double-dip recession since 1975, when the banking sector was in turmoil and the country was being gripped by a series of strikes.

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