* UK offers more grants to firms affected by lockdown
* Economy seen contracting again in first quarter
* Sunak says measures will help ready workers for recovery
* British Chambers of Commerce urges full-year support plan
(Adds reaction from opposition Labour Party)
By Andy Bruce and David Milliken
LONDON, Jan 5 (Reuters) - Britain offered a 4.6 billion
pound ($6.2 billion) support package for businesses on Tuesday
to soften an expected recession caused by a surge in COVID-19
cases that has triggered a third national lockdown.
Prime Minister Boris Johnson announced the lockdown on
Monday, saying a highly contagious coronavirus variant risked
overwhelming the health service within 21 days.
Most people must work from home and schools have closed for
almost all pupils. Hospitality venues must stay shut, as well as
non-essential shops.
Britain's economy looks likely to tip back into recession -
shrinking in the final quarter of 2020 and the first quarter of
2021 - following a record 25% fall in output in the first two
months of lockdown in 2020.
The new downturn is expected to be far softer, with most
businesses now much better adapted to working remotely and
construction sites and factories expected to stay open.
But economists at J.P. Morgan still predicted a 2.5% fall in
output for the first three months of 2021.
Finance minister Rishi Sunak has previously announced
emergency help for the economy worth 280 billion pounds,
including a massive job protection scheme that will run until
the end of April.
Under Tuesday's additional measures, retail, hospitality and
leisure companies will be able to claim one-off grants worth up
to 9,000 pounds to get them through the coming months, costing
up to 4 billion pounds in total, along with 600 million pounds
of grants for other businesses.
"This will help businesses to get through the months ahead –
and crucially it will help sustain jobs, so workers can be ready
to return when they are able to reopen," Sunak said.
Government forecasters in November predicted almost 400
billion pounds of borrowing this financial year, equivalent to
19% of GDP - a peacetime record but one that, at least for now,
can be financed at record-low interest rates.
The Bank of England is buying government debt and in
November ramped up its asset purchase programme to almost 900
billion pounds with the intention of using it throughout 2021.
However, the British Chambers of Commerce said Sunak's
"drip-feed approach" to support for businesses would see many go
to the wall as they would not qualify for sufficient assistance.
"While this immediate cashflow support for business is
welcome, it is not going to be enough to save many firms," BCC
director general Adam Marshall said.
The opposition Labour Party said millions of people had been
let down by Sunak's announcement.
"Instead of delivering the support that Britain needed, he's
ploughing on with plans to hit people in their pockets with pay
cuts, benefits cuts and tax rises," its finance spokeswoman
Anneliese Dodds said.
The Organisation for Economic Cooperation and Development
has estimated Britain's economic recovery by the end of this
year will be the slowest of all its member countries except
Argentina.
($1 = 0.7372 pounds)
(Editing by Guy Faulconbridge, John Stonestreet and Alex
Richardson)