The UK economy is set to log negative growth in the first three months of this year, the National Institute of Social and Economic research said Friday, as the country went into a third and a tighter lockdown at the start of the year to battle the new and fast-spreading strain of coronavirus and due to the post-Brexit adjustment.
The think thank forecast negative growth of 3.4 percent for the first quarter of 2021.
Growth slowed to 0.9 percent in the fourth quarter of 2020, suggesting a 9.8 percent contraction for the whole year, the NIESR said.
The second lockdown had a far smaller impact on economic economic activity than the first one, the think tank noted.
The NIESR expects the tighter Covid-19 restrictions to linger beyond January.
“Temporary and permanent adjustments post-Brexit transition period are likely to also weigh on growth in the early part of 2021, but the vaccine roll-out provides some encouragement for consumption and investment in the second half of 2021 and beyond,” NIESR Principal Economist Rory Macqueen said.
“The economic impact of the lockdowns is clearly negative in the short-term but will be significantly positive in the medium term if successful in controlling the virus and restoring confidence.”