23 September 2020

A second lockdown could call last orders on parts of the UK economy

Britain will soon have to weather not only a second lockdown, but the increasingly likely prospect of a no-deal Brexit.

LONDON, ENGLAND - SEPTEMBER 22: The Speaker pub in Westminster remains closed on September 22, 2020 in London, England. Many pubs and bars in London have yet to reopen following the initial lockdown that shut their doors between late March and early July. A report from CGA and AlixPartners showed that, as of the end of August, around 28% of licensed premises in Central London had yet to reopen. For the ones that have reopened, social distancing requirements meant to curb the spread of Covid-19 have also sharply curbed revenues of a business model that relies on packing in patrons. As coronavirus infection rates start to rise, the British government is introducing a 10pm curfew for pubs, bars and restaurants, which is sure to make hard times harder for the city's watering holes. (Photo by Dan Kitwood/Getty Images)

New restrictions are coming to England, Scotland, Wales and Northern Ireland. From tomorrow (24 September) there will be a 10pm curfew for all bars and restaurants, which will also be limited to table service. Meetings between households indoors are now prohibited in Scotland and Northern Ireland, and partially prohibited in Wales.

The challenge the government has set itself is twofold. As it stands, the extension and re-implementation of lockdown measures has yet to be matched by the extension and re-implementation of economic support. The governor of the Bank of England, Andrew Bailey, is the latest to recommend a “rethink” about the ending of the furlough scheme, while the Confederation of British Industry is calling for further relief for businesses.

And the calls for government assistance are growing: the change in approach means that sports clubs will go without the financial support brought by match-day income, while night clubs have yet to be able to open.

The second part of the challenge is: how can businesses and households manage both the challenges of a fresh lockdown, and the preparation for an end to the Brexit transition period on 31 December? The government made a virtue of not pausing any of its pet projects during the lockdown – pushing ahead with reforms to defence procurement, beginning to remodel the civil service and pursuing Brexit on the same timetable as before. We may about to discover the dangers of that approach.