Severe COVID-19 restrictions raise chance of double-dip

The new Tier 4 COVID-19 restrictions, which closely resemble November’s lockdown, raise the chances that the economy stagnates, if not contracts, in the first three months of 2021. If the economy is heading for a double-dip, at least the second leg down will be much smaller than the first. But this is only because activity in some sectors never fully recovered and therefore cannot fall as far this time. And if Tier 4 restrictions keep GDP some 14% below its pre-crisis level, this is of little comfort.