Downturn to spark double-dip disaster

BRITAIN faces the prospect of a doubledip recession this winter despite the economy growing 15.8 per cent during the third quarter, economists warn.

On Thursday, the Office for National Statistics is expected to say that the economy returned to growth, having entered recession during the first and second quarters.

Britain’s recession was caused by the slowing global economy, lockdown and other measures taken to combat coronavirus.

However, the economy started slowing last month and with Britain going back into lockdown and the looming prospect of a no-deal Brexit at the end of the year, economists warn that another downturn is inevitable.

IHS Markit chief business economist Chris Williamson said: “It looks like another potentially severe downturn is coming. A double-dip recession is on the cards. We all knew there would be a rebound during the third quarter, but it looks bleak for the fourth.” Howard

Archer, chief economic adviser to the EY ITEM Club think tank, said: “I expect there will be a contraction of about 4 per cent in Q4.

“It won’t be like it was in April. There are factors such as schools still being open and construction operating, which mean there will be less of a hit to activity. However, it is highly likely there will be another contraction.”

Investec chief economist Philip Shaw added: “The Q3 GDP figure will look healthy but that is when you’re looking in the rear-view mirror. Looking forward, the picture isn’t so rosy. Lockdown 2 will result in a decline in activity, making a fourth quarter contraction inevitable.”

On Tuesday the ONS is expected to say the unemployment rate rose in September from 4.5 per cent to 4.8 per cent.

However, Shaw warned that the true scale of unemployment in the UK is likely to be worse, given the masking effect of Government support schemes for workers and the self-employed.

“The issue with the unemployment numbers is that they do not tell you the whole picture of joblessness as we have rising monthly claimant count figures and furlough masking things,” he said.