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UK businesses report deepening hit from renewed COVID clamp-down, CBI says

·2-min read

LONDON (Reuters) - A fall in British business activity deepened after the country began to tighten coronavirus restrictions again last month, the Confederation of British Industry said on Wednesday, calling for more support for businesses from the government.

The balance of firms reporting growth in the three months to December slipped to -21 from -16 a month earlier, although it remained a long way above a pandemic crisis low of -71 in June, the CBI's monthly growth indicator showed.

"The economy is having a bad end to a dreadful year," said Charlotte Dendy, principal economist at the CBI.

The survey was carried out before last weekend's introduction of new, tougher restrictions for London and surrounding areas as well as other regions in the United Kingdom.

"These figures show that private sector activity continues to decline, with the second lockdown in England having a particularly significant impact on our all-important services sector," Dendy said.

British businesses are also facing uncertainty about the country's trading relationship with the European Union ahead of the Dec. 31 expiry of a post-Brexit transition period.

A measure of expectations for the next three months stood at -18, an improvement from November but still suggesting little recovery in early 2021.

Economists say that an extension of the latest coronavirus restrictions into January could push Britain's economy into a new recession, albeit a less severe one than in 2020.

"There is no doubt that a fresh look will be needed in January as to how the government can support UK businesses, given a renewed tightening in restrictions," Dendy said.

Finance minister Rishi Sunak is on course to spend 280 billion pounds during the current financial year to protect the economy and the budget deficit is expected be almost double its level after the global financial crisis.

(Writing by William Schomberg; editing by Michael Holden)