U.K. Lockdown 2.0 Means ‘W’ Recovery, More BOE Easing

(Bloomberg) -- The British government’s decision to impose a second lockdown in England for a month means the economy will contract in the fourth quarter, leaving the U.K. facing a W-shaped recovery. The impact will depend on the exact length of the lockdown and the speed at which it is eased, but assuming it lasts only four weeks and is gradually reduced in the run up to Christmas, Bloomberg Economics expects gross domestic product to contract by 3% in the period. That means it’s no longer a question of whether policy makers at the Bank of England add stimulus at their meeting this week, but how much.

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