The four-week lockdown will wipe around £6 billion from London’s economic output as thousands of shops, restaurants and pubs are forced to stay shut until December.
Boris Johnson’s latest stay at home order means that the capital’s GDP — heavily dependent on retail and hospitality — will slump by around five per cent in the crucial run-up to Christmas, according to analysis for the Standard by Simon French, chief economist at City brokers Panmure Gordon.
The grim projection came as the Bank of England said it would pump an extra £150 billion into the economy — more than the expected £100 billion — to help keep business afloat. Chancellor Rishi Sunak was expected to pledge to carry on the furlough scheme until spring in areas where businesses are ordered to close.
He was also expected to say the scheme would remain available UK-wide, meaning that Scotland and Wales could call on it if they order separate lockdowns from England in future.
The Bank warned that economic activity will not recover to its pre-pandemic size until early 2022. The disruption caused by restrictions in the UK means that national GDP is now expected to fall by almost 11 per cent in 2020. The Bank had previously forecast a 9.5 per cent contraction.
Des Gunewardena, chief executive of fine dining group D&D London, said: “It is really important now that we all do our best to get the virus under control so we can reopen in December.
“Without December trading, the thought of going into January is very bleak.”
The latest lockdown came into force after a “last-chance” frenzy when the retail and hospitality sectors enjoyed their best takings since the summer.
Jace Tyrrell, chief executive of business group the New West End Company, said: “We’ve seen the greatest surge in West End footfall since August. While still below the usual seasonal levels, the increase in trade has demonstrated that we can continue to handle such volumes safely without compromising social distancing.”
Analysis from specialist hospitality payroll website S4labour shows that sales were up 63.4 per cent and 59.3 per cent in areas with Tier 2 and 3 restrictions, which includes London, on Tuesday night and last night respectively.
Mayor Sadiq Khan said: “For shops and businesses, having to close just as preparations for Christmas begin is a huge blow at the worst possible time.”
He added it was “deeply frustrating” that a second lockdown was required because the Government declined to act on calls from its scientific advisers for a “circuit breaker” over October half-term.
Meanwhile thousands of revellers flocked to venues across London last night, with areas including Soho and Camden teeming until venues closed their doors at 10pm. Police dispersed some crowds in the West End as the lockdown kicked in at midnight.
Coronavirus: National Lockdown 2
But Mr Khan also warned that the Met Police and council officers “will not hesitate” to crack down on gatherings.
He launched a #LondonTogether campaign in a bid to emphasise that “solidarity and compassion” can help people to get through the lockdown.
Mr Khan told the Standard: “With Covid cases still spreading in London, I am today making a direct appeal to Londoners to follow all the new rules coming in today.
“I know going into lockdown will increase anxiety for many, but with hospital admissions increasing, we simply can’t afford our ICUs to be overwhelmed with another surge in demand over the winter. Following the new rules will undoubtedly save lives.
“And for any groups of people who think it’s acceptable to continue to hold mass gatherings, be in no doubt the Met Police and council officers will not hesitate to take the necessary enforcement action.”