London Daily

Focus on the big picture.
Monday, Aug 25, 2025

Covid cases push UK closer to double-dip recession

Covid cases push UK closer to double-dip recession

Snapshot of key economic indicators show retail sales slowing and unemployment rising with budget deficit at record December level
Covid cases fall during lockdown but remain high


The number of daily new confirmed coronavirus infections has fallen in the past month, but remains higher than at any point during the first wave of the pandemic. Case numbers have fallen during the current lockdown, despite continued high levels due to the faster-spreading UK variant of the virus. The seven-day average of new cases has fallen from record highs at the end of December of more than 61,000, down to about 33,000 as of 20 January. The number of deaths within 28 days of a positive Covid test – which lag behind infections – has risen above 100,000 in total, with the seven-day average standing at about 1,200 – higher than the peak in the first wave.

Mobility plunges during renewed lockdowns


The number of trips taken on UK roads and on public transport usage plunged in January during the latest lockdown, in a potential reflection of weaker economic activity as more people stayed at home. According to Apple mobility data – which records requests made to Apple Maps for directions – bus and train journeys are down more than 65% and road journeys have halved from pre-pandemic levels. Mobility levels are far lower than during the second English lockdown in November, but are a little higher than in the first spring lockdown, reflecting a smaller drop in economic activity.

Vaccine optimism fades from stock markets


Fading hopes that Covid vaccines could deliver a rapid economic recovery from the pandemic have taken the fuel out of a stock market rally that had begun late last year when the jabs were first approved. Prolonged lockdown restrictions in the UK and several other countries have raised the prospect of a double-dip recession that will damage company profits. After rallying to a peak of almost 6,873 earlier this month, the FTSE 100 has fallen by more than 300 points. It remains down by more than a 1,000 points from the start of 2020 before the pandemic struck.

Inflation climbs in the run-up to Christmas


The temporary return of shoppers to most parts of the UK fuelled a rise in inflation in December. The consumer prices index increased to 0.6%, from 0.3% a month earlier, fuelled by growth in transport costs and a rise in computer game prices in the run up to Christmas. Some economists are forecasting a sharp rise in inflation over the coming months as the economy reopens, driven by continued government support and low interest rates set by the Bank of England. However, inflation remains significantly below the Bank’s 2% target rate set by the government, reflecting continued weaker demand for goods and services.

UK edges closer to double-dip recession


Surveys of business activity have revealed a slump in January during the latest Covid lockdown, raising fears that the economy is facing a double-dip recession. The IHS Markit/Cips purchasing managers index showed the services sector – which accounts for 80% of the economy – has been hit especially hard. Activity dropped from 49.4 in December to 38.8 in January, on a scale where anything below 50 represents a shrinking economy. Amid elevated Covid infections on the continent, activity in the eurozone has also faded, although not by as much as in the UK. However, activity remains strong in the US and China.

Unemployment rises to four-year high


Unemployment has hit the highest level for four years, rising to 5% in the three months to the end of November – representing 1.7 million people – from 4.9% in the three months to the end of October. The jobless rate was 4% before the pandemic struck. However, weekly figures suggest the number of people being made redundant had started to ease slightly from a peak in September, as the jobs market showed signs of stabilising after worse damage earlier in the pandemic. It comes after the chancellor, Rishi Sunak extended the furlough scheme, now due to run until the end of April. However, the chancellor is coming under pressure to provide extra support as job losses climb.

Retailers suffer weak December sales growth


British retail sales staged only a weak recovery in December in the key Christmas shopping period. After many shops reopened following the second English lockdown, the total volume of goods bought rose by 0.3% comparedwith the level in November, far below economists’ expectations for growth of 1.2%. For 2020 as a whole, retail sales fell by 1.9% as Covid triggered the sharpest annual decline on record, despite a boom in online spending during lockdown. While clothing retailers and department stores have been hit hardest, supermarkets have recorded stronger sales while pubs and restaurants have been closed.

Budget deficit hits record December level


UK government borrowing hit its highest December level on record as state spending rose and tax receipts fell amid the renewed economic turmoil caused by Covid-19. The ONS said borrowing rose to £34.1bn last month. It takes the budget deficit – the gap between spending and receipts – to about £271bn for the first nine months of the financial year, more than £212bn higher than a year ago. December’s borrowing pushed the national debt – the sum total of every deficit – to £2.1tn, or about 99.4% of gross domestic product (GDP), the highest debt ratio since 1962. Ahead of the March budget, Rishi Sunak has said “hard choices” must be taken to balance the books. But economists warn austerity or tax rises could derail the UK’s economic recovery.

Companies adapted during second England lockdown


Britain’s economy shrank by 2.6% in November during the second English lockdown. However, economists had forecast a 5.7% fall in GDP. The smaller decline could help Britain to avert a double-dip recession at the end of 2020. Economists regard two consecutive quarters of falling GDP as the definition of a recession. After GDP fell by about a quarter in the first half of 2020, there was a 16% summer rebound in the third quarter. Analysts said businesses appeared to have adapted better to the November lockdown than in the more widespread shutdown in the spring of 2020, while more shops stayed open and manufacturing and construction activity continued. Buteven if growth is positive or flat in the fourth quarter, thereby averting an imminent double dip recession, a bigger decline in GDP is still expected in January amid the tougher restrictions now in place. GDP also still remains 8.5% below pre-pandemic levels.

House prices reach new high but growth slows


The average price of a house in the UK reached a record high of £253,374 in December but growth is slowing and prices may fall over the year, according to Halifax, Britain’s biggest mortgage lender. House prices rose by 0.2% in December compared with November – the lowest rate of growth in the past six months of continuous gains – as people move for more space and try to take advantage of the government’s stamp duty holiday. However, Halifax has said prices could collapse by up to 5% this year after the stamp duty holiday ends in March and as rising unemployment hits the property market.

Newsletter

Related Articles

0:00
0:00
Close
Vietnam Evacuates Hundreds of Thousands as Typhoon Kajiki Strikes; China’s Sanya Shuts Down
UK Government Delays Decision on China’s Proposed London Embassy Amid Concerns Over Redacted Plans
A 150-Year Tradition to Be Abolished? Uproar Over the Popular Central Park Attraction
A new faith called Robotheism claims artificial intelligence isn’t just smart but actually God itself
Deputy Prime Minister Angela Rayner Purchases Third Property Amid Housing Tax Reforms Debate
HSBC Switzerland Ends Relationships with Over 1,000 Clients from Saudi Arabia, Lebanon, Qatar, and Egypt
Sharia Law Made Legally Binding in Austria Despite Warnings Over 'Incompatible' Values
Italian Facebook Group Sharing Intimate Images Without Consent Shut Down Amid Police Investigation
Dutch Foreign Minister Resigns Amid Deadlock Over Israel Sanctions
Trump and Allies Send Messages of Support to Ukraine on Independence Day Amid Ongoing Conflict
China Reels as Telegram Chat Group Shares Hidden-Camera Footage of Women and Children
Sam Nicoresti becomes first transgender comedian to win Edinburgh Comedy Award
Builders uncover historic human remains in Lancashire house renovation
Australia Wants to Tax Your Empty Bedrooms
MotoGP Cameraman Narrowly Avoids Pedro Acosta Crash at Hungarian Grand Prix
FBI Investigates John Bolton Over Classified Documents in High-Profile Raids
Report reveals OpenAI pitched national ChatGPT Plus subscription to UK ministers
Labour set to freeze income tax thresholds in long-term 'stealth' tax raid
Coca‑Cola explores sale of Costa coffee chain
Trial hears dog walker was chased and fatally stabbed by trio
Restaurateur resigns from government hospitality council over tax criticism
Spanish City funfair shut after serious ride injury
Suspected arson at Ilford restaurant leaves three in critical condition
Tottenham beat Manchester City to go top of Premier League
Bank holiday heatwave to hit 30°C before remnants of Hurricane Erin arrive
UK to deploy immigration advisers to West Africa to block fake visas
Nurse who raped woman continued working for a year despite police alert
Drought forces closures of England’s canal routes, canceling boat holidays
Sweet tooth scents: food-inspired perfumes surge as weight-loss drugs suppress appetites
Experts warn Britain dangerously reliant on imported food
Family of Notting Hill Carnival murder victim call event unmanageable
Bunkers, Billions and Apocalypse: The Secret Compounds of Zuckerberg and the Tech Giants
Ukraine Declares De Facto War on Hungary and Slovakia with Terror Drone Strikes on Their Gas Lifeline
Animated K-pop Musical ‘KPop Demon Hunters’ Becomes Netflix’s Most-Watched Original Animated Film
New York Appeals Court Voids Nearly $500 Million Civil Fraud Penalty Against Trump While Upholding Fraud Liability
Elon Musk tweeted, “Europe is dying”
Far-Right Activist Convicted of Incitement Changes Gender and Demands: "Send Me to a Women’s Prison" | The Storm in Germany
Hungary Criticizes Ukraine: "Violating Our Sovereignty"
Will this be the first country to return to negative interest rates?
Child-free hotels spark controversy
North Korea is where this 95-year-old wants to die. South Korea won’t let him go. Is this our ally or a human rights enemy?
Hong Kong Launches Regulatory Regime and Trials for HKD-Backed Stablecoins
China rehearses September 3 Victory Day parade as imagery points to ‘loyal wingman’ FH-97 family presence
Trump Called Viktor Orbán: "Why Are You Using the Veto"
Horror in the Skies: Plane Engine Exploded, Passengers Sent Farewell Messages
MSNBC Rebrands as MS NOW Amid Comcast’s Cable Spin-Off
AI in Policing: Draft One Helps Speed Up Reports but Raises Legal and Ethical Concerns
Shame in Norway: Crown Princess’s Son Accused of Four Rapes
Apple Begins Simultaneous iPhone 17 Production in India and China
A Robot to Give Birth: The Chinese Announcement That Shakes the World
×