We’ll feel the pinch for long time to come

PRIME Minister Boris

Johnson’s decision to effectively cancel Christmas will dominate the headlines and conversations. But the economic consequences of his measures to combat this new strain of coronavirus will be felt for years to come.

To put it bluntly, we will see job losses, businesses closing down for ever, communities blighted, the economy going back into reverse and, eventually, painful tax rises and official spending cuts.

Both are inevitable, given the record-breaking amounts the Government has had to borrow to pay for its Covid-19 response.

Official borrowing for the year is already at a record £244billion and will keep rising. Our national debt is over £2trillion and we owe more than we earn.

To keep our borrowing rates at the ultra-low levels they are now, the market will want to see fiscal discipline and measures to cut spending to help repay that debt.

This means cuts and tax rises, which I fear will be so painful that people will look back fondly on austerity.

The first national lockdown from March to July is responsible for the biggest economic contraction on record. Although the Government has placed only London, the South East and the East of England in Tier 4, UK GDP as a whole will take a smaller but still serious hit.

That is because the highly virulent nature of the new Covid-19 strain means Tier 4 restrictions are unlikely to be eased at the review on December 30, and Tier 4 areas account for about 45 per cent of total UK economic output.

It is almost certain that the economy will contract again, possibly sending us back into recession.