Fresh lockdowns announced across Europe in recent days to contain the resurgence of the coronavirus pandemic have triggered a flurry of downgrades to economic growth forecasts as restrictions on activity threaten the continent’s recovery. The eurozone economy is now expected to shrink by 2.3 per cent in the fourth quarter of this year, according to economists surveyed by the Financial Times – a worse performance than they had predicted before the restrictions were announced.
The bloc rebounded from its coronavirus-induced recession in the three months to September, recording record quarterly gross domestic product growth of 12. 7 per cent, figures published on Friday showed, but output was still well below pre-pandemic levels.
The data, along with the array of fresh restrictions announced in France, Germany and other countries in recent days, sent economists scrambling to update their forecasts. An FT survey of 18 economists at leading banks and institutions found that all but one expected the eurozone economy to shrink again in the final quarter. Most had previously forecast positive growth.
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The Bank of England is expected to forecast later this week that the UK’s summer rebound in growth was weaker than it estimated in August, that output will at best barely grow in the fourth quarter, and that the economic scars will be deeper and longer-lasting than hoped. Asecond national lockdown for England was announced on Saturday, with all hospitality and non-essential retail to close for at least four weeks from Thursday.
Christian Keller, chief economist at Barclays, said: “Although the outlook for manufacturing has held up relatively well … the downturn in the much larger service part of the economy directly affected by the new restrictions is likely to pull the euro area economy into negative growth again.”