Revealed: Boris Johnson's decision to impose tougher Covid tiers 'will cost £900 million a day'

’s decision to impose tougher tiers of restrictions on much of the country this week will cost the economy £900 million a day, according to a leading economic forecaster.

Ministers have refused to publish any details of the economic impact of the new tiers, and have only agreed to do so in the next couple of days after coming under pressure from backbench Conservative MPs.

More than 34 million people are facing tougher restrictions than before the national lockdown in the Prime Minister’s new tougher tiers this week.

MPs have been described as being “in open revolt” after 99 per cent of England’s population was placed in the highest tiers, two and three, with only Cornwall, the Isle of Wight and Isles of Scilly placed in the lowest tier 1.

Large swathes of the Midlands, the North-East and North-West were among areas where more than 23 million people have been placed in the most restrictive tier 3, in which almost all household mixing is banned and bars and restaurants are limited to takeaway and delivery services.

Analysis by the Centre for Economic and Business Research estimated that the new tiers will cut England’s gross domestic product by 13 per cent, or £900 million a day, compared with December last year.

Overall in December, which is a short working month, the economic hit is expected to be £20 billion compared with the same month last year.

The CEBR worked out its forecast based on 31 per cent of England’s economy being in tier 3; 68 per cent in tier 2 and just one per cent in Tier 1.

The forecaster estimated that the daily loss in GDP for firms in tier 3 is 20 per cent, less than the lost output of 25 per cent of GDP in April when schools and shops were closed. The loss in tier 2 was estimated to be 10 per cent.

Doug McWilliams, the CEBR’s deputy chairman. said: “It remains to be seen whether those costs, which of course can’t take account of the longer term damage done to so many pubs, restaurants, sports and entertainments venues, is justified by the reduced incidence of the disease.

“My suspicion is that the shutdowns imposed by Whitehall will end up doing more economic damage than can be justified on medical grounds.”

Conservative MP Sir Robert Syms said: “I am staggered at the economic cost at a time the number of infections are falling with the R number we are inflicting more misery on the UK economy the Government should be doing a similar assessment.”

The Institute of Economic Affairs, a leading free market think-tank, said that putting the whole of the UK into tier 3 could cost from the pubs and hotels sector alone £1.2 billion.

Julian Jessop, economics fellow at the IEA, added: “The tiered system is less of a drag than the England-wide lockdown. The package of restrictions currently in place – for example, non-essential shops are not allowed to open – is tighter than those in any of tiers 1-3, so even moving from nationwide lockdown to tier 3 is a marginal improvement – and will boost growth.”

He added: “The limited evidence so far suggests that the economic costs of lockdown 2 itself are less than feared, and certainly a lot less than lockdown 1.

“This is partly because people and businesses have now adapted to work within the new rules.”

Andrew Goodwin, chief UK economist at Oxford Economics, added: “Our view is that we are likely to see GDP fall by almost 3 per cent in the fourth quarter [October to December] as a whole.

“Therefore, we should see a modest recovery in activity when we switch from lockdown to the tiered system in December.

“But activity is likely to remain some way below the levels it reached in September, which is likely to represent the peak in activity until the spring.”

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