European nations set to take step back

New restrictions will wipe out progress made to economy since first lockdown

The flurry of new lockdowns in Europe amid fast-rising rates of novel coronavirus infection will place a heavy toll on the continent's economies, experts have warned.

The United Kingdom is set to go back into a lockdown on Thursday. Belgium, France, Germany, and Greece have all recently taken similar steps. Spain and Italy, while not yet fully locked down, have also greatly restricted enterprise and social interaction.

The moves, while recommended and welcomed by scientists and medical professionals, are not as popular among financial analysts. Some told the Financial Times the eurozone economy is likely to shrink by 2.3 percent in the fourth quarter as a result.

The paper said a survey of 18 economists suggests Europe is in line for a worse performance than they were expecting.

Christian Keller, chief economist at Barclays, said: "Although the outlook for manufacturing has held up relatively well … the downturn in the much larger service part of the economy directly affected by the new restrictions is likely to pull the euro area economy into negative growth again."

The eurozone had partially recovered from a recession caused by lockdowns earlier this year and, in the three months to September, recorded record quarterly gross domestic product growth of 12.7 percent, despite output being well below pre-pandemic levels.

The Financial Times said economists at leading banks and institutions were almost unanimous in saying the eurozone economy will now shrink again. Previously, almost all had expected growth during the fourth quarter.

But they said the economic decline should be less severe than during the first lockdown, when economic output fell by 15 percent, because the latest restrictions are less prohibitive.

Katharina Utermohl, an economist at Allianz, told the FT businesses "have gained experience in navigating tough lockdown restrictions".

Heiko Maas, Germany's foreign minister, told the Tagesspiegel newspaper Berlin expects to keep its borders open this time.

The Guardian newspaper added Bank of England policymakers will likely agree to inject up to 100 billion pounds ($129 billion) into the British economy later this week, amid fears the UK could be heading for a double-dip recession.

The paper said the monetary policy committee at the bank is considering the idea.

Gerard Lyons, an economic adviser to Boris Johnson when he was London's mayor, told the Guardian: "The economy will contract and while not by as much as it did in the initial lockdown, it will still be significant, possibly as much as 7.5 to 10 percent."

He added that the number of people out of work could rise, from 1.52 million to 3 million.

The New York Times said the idea that the European economy was "snapping back smartly from the pandemic" must now be replaced with the fact that "it's starting to look like March again on city streets" and that the risk of another severe downturn in Europe is rising.

The new lockdowns follow the European Centre for Disease Prevention and Control saying novel coronavirus infection rates in Europe are climbing.

In Belgium, Europe's most severely impacted nation, more than 1,700 people in every 100,000 are infected with the virus that causes the COVID-19 disease. The Czech Republic, Slovenia, and Luxembourg, which all have infection rates of more than 1,000 in every 100,000 people.