The UK economy should brace itself for a £4 bn a month hit and see taxpayers foot the bill for more emergency support as new Covid restrictions to clamp down on the spread of the Omicron variant come into force, a think tank has warned.
The right-wing Institute of Economic Affairs (IEA) said Plan B measures being considered by the Government could “easily knock” 2% off the country’s economic output.
It also cautioned the Chancellor may need to launch more support schemes to help hard-hit sectors and firms, adding further to the UK debt pile.
The IEA called for “much stronger evidence” that the new variant sweeping across the UK is more deadly and not just more infectious before putting in place further measures.
Julian Jessop, economics fellow at the IEA, said: “Even without a full national lockdown, the additional Covid restrictions apparently being considered in Whitehall could easily knock 2% off GDP (gross domestic product) – costing the UK economy £4 billion a month – and force the taxpayer to stump up billions more to prevent a new wave of bankruptcies and job losses.
“This is on top of all the social costs and harms to people’s wellbeing and liberties, as well as the risk of further disruption to children’s education.”
Under the Government’s Plan B, people could be told to work from home to limit the spread of the virus.
Covid vaccine passports may also be needed for events with crowds, such as football matches.
Professor Neil Ferguson, a member of the Scientific Advisory Group for Emergencies (Sage), has suggested people may be told to work from home imminently as Omicron spreads fast, with the variant set to take over from the Delta strain before Christmas.
He added that a UK-wide lockdown to deal with the threat of Omicron cannot be ruled out, although the current threat is unclear.Om