The UK economy is set to shrink 12 percent in November due to the second lockdown to tackle the resurgence in the coronavirus pandemic, but rebound strongly next month, the National Institute for Economic and Social Research said Thursday.
The think tank said in its monthly report that the outlook is for a 2.2 percent decline in growth in the fourth quarter. Growth is seen at 0.3 percent in October.
That said, levels of activity are expected to return to October levels in December. As such a rapid rebound is expected following the end of the second lockdown, NIESR still forecast a decline of 11.3 percent this year.
NIESR pointed out the downside risks if the lockdown is extended or does not succeed in bringing down infection rates. Upside risks are expected to come from a smaller than anticipated fall in November as households switch to online consumption ahead of the holiday season, the think tank said.
Earlier on Thursday, ONS reported that the UK economy grew 15.5 percent in the third quarter as activity levels recovered from the first phase of the Covid-19 pandemic and subsequent control measures.
“Growth in the fourth quarter will be much slower than in the third quarter and is likely to turn negative, due to weaker growth in October and a second lockdown from November,” NIESR Senior Economist Kemar Whyte said.
“Our expectations for the fourth quarter and beyond will depend on the stringency and duration of ongoing lockdowns; local and national.”
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