FTSE 100 falls amid UK lockdown threat due to Covid-19 outbreak

The blue-chip index tumbled on Monday after economists forecast the UK economy is likely to shrink by as much as 14% due to the economic impact of the coronavirus outbreak.

The FTSE 100 fell 4% on Monday after economists forecast the UK economy is likely to shrink by as much as 14% due to the economic impact of the coronavirus outbreak.

Economists believe that UK businesses will see profits take a significant hit as a result of the Covid-19 outbreak, leading companies to cut spending and pile more debt onto their balance sheets to survive the crisis.

The FTSE 100 is down 231 points to 4962 as of 15:30 (GMT).

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UK equities tumble despite government stimulus

The FTSE 100 showed signs of stabilising last week after the UK government announced a £350 billion rescue package and the Bank of England lowered interest rates for a second time to help British businesses deal with the economic impact of Covid-19.

However, the index continued its descent on Monday, with the FTSE 100 down 35% since its peak in January and this week is on course for its worst monthly performance since 1987.

The domestically-focused FTSE 250 also tumbled 4% on Monday, with the midcap index down 38% year-to-date.

You can go long or short the FTSE 100 with IG using derivatives like CFDs and spread bets.

Boris Johnson threatens tighter Covid-19 restrictions

Things could get even worse for British businesses if the UK Prime Minister imposes a country-wide lockdown after citizens failure to adhere to ‘social distancing’ measures.

On Sunday, Johnson warned that the government may be forced to impose curfews and travel restrictions just days after announcing that pubs, clubs and gyms must remain closed for the foreseeable future.

Retailers like Ted Baker fell as much as 24% in early morning trading on Monday in reaction to Johnson’s warning, with shares in Primark-owner Associated British Foods and broadcaster ITV also taking a notable tumble.

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