The introduction of Covid-19 countermeasures across the UK and the rest of Europe, not to mention the US and Asia, to try to combat the spread of the Omicron variant has raised the spectre of the global economy stumbling into 2022 in a distinctly weakened state. But how big is their impact likely to be? Will there be redundancies? Employers are unlikely to panic in the run-up to Christmas, no matter how disappointed they are that customers have begun questioning spending decisions. Many firms, especially in the hospitality, retail and tourism industries, were already short of staff. A longer spell of working from home could change how firms respond, while even tighter restrictions are expected to be met with an increase in the number of firms going bust, possibly before they get a chance to make staff redundant. A recent Bank of England report found that more than 30% of UK’s small businesses were classified as highly indebted, with borrowing levels of more than 10 times their cash balances – up from 14% before Covid-19 hit. Rishi Sunak has rebuffed calls from industry bosses to bring back the furlough scheme, and rejected Labour’s demand for an increase in sick pay to support workers who test positive to the virus. However, the chancellor has hinted that steps to protect the worst-hit industries will be considered should Omicron force ministers to adopt further measures. Will prices rise even higher? There is a strong prospect of shops raising prices in response to the stricter restrictions. As rising cases and rule changes make going to bars, restaurants and shows less attractive, millions of households are expected to channel the money they would have spent there on purchases, at a time when restrictions mean it is more difficult to import items into the UK. Future lockdowns in some of the world most important manufacturing hubs, including China, could further restrict the number of goods coming to the UK, adding extra pressure on prices. Paul Dales, chief UK economist at Capital Economics, said the emergence of the Omicron variant would slow the recovery and increase the risk of higher inflation. “It has arguably increased the upside risks to our consumer prices index inflation forecasts,” he said. Will there be another recession? Most economists believe mask-wearing in shops and working from home will do little to alter their forecasts for growth over the next couple of years. Most businesses have adapted to home working and its reintroduction will cause only minimal disruption. That means they expect the recovery to continue and the economy to climb back above its pre-pandemic level. However, plenty of businesses will be harmed by a lack of shoppers, and the January sales could prove to be a massive flop. Samuel Tombs, chief UK economist at the consultancy Pantheon Macroeconomics, said the impact of Omicron could be measured in lost GDP, with a cut in his estimate for growth to just 0.3% in the first quarter of 2022 compared with a previous forecast of 0.8%. It would not mark the beginning of a recession – which needs two consecutive quarters of negative growth – but would be a painful reminder of the enormous cost of the pandemic.