Monday, September 28, 2020

East Midlands Chamber comments on figures confirming UK is officially in a recession

The latest figures measuring the UK’s economic activity released by the Office for National Statistics (ONS) today confirmed the country is officially in a recession.

They showed the national gross domestic product (GDP) shrank by 20.4% between April and June.

As it followed another 2.2% fall in output in the first quarter, this pushed Britain into its first technical recession – defined as two straight quarters of economic decline – since 2009.

Responding to the new data, Chris Hobson, Director of Policy and External Affairs at East Midlands Chamber (Derbyshire, Nottinghamshire, Leicestershire), said: “News that we are in a recession obviously comes as no surprise to anyone given that the economy came to a standstill during the Covid-19 lockdown and spending has still not recovered anywhere near sufficient levels to get us back on track.

“The stark impact of the past few months in the East Midlands was illustrated by our Quarterly Economic Survey for Q2, in which two-thirds of businesses reported a fall in UK sales and half watched their export sales slump in the three months to June.

“Our State of the Economy Index – which is modelled across a range of key performance indicators, including sales and orders, recruitment, cash flow, investment intentions and confidence – fell to an unprecedented level at -411, a mirror opposite of the +411 peak it reached just six years ago in Q2 2014.

“So we know the fight we’re in and that this hugely difficult period isn’t over by a long shot. Businesses continue to face very significant challenges, and one of the biggest is the certainty that exists.

“Speculation from a wide range of sources over what might happen in the future – whether it’s more local lockdowns or economic trade-offs between what can and can’t open – isn’t helpful to business confidence.

“So it’s crucial that Government remains calm and consistent in its messages, while providing businesses with the support they need in order to plan ahead and invest.

“Of course, another big change is on the horizon on 1 January 2021, when the Brexit transition period ends. It’s becoming increasingly clear that businesses do not feel at all prepared for a new trading relationship with the EU, nor do they feel the Government is ready, and the cash flow issues they are experiencing due to Covid-19 are preventing many from being able to stockpile.

“Westminster initiatives like the Getting Building Fund allocation announced this week, which will pump almost £65m into 14 infrastructure projects across the region, are a positive step towards economic recovery and we need to see more of this.

“We’d also like to see businesses receive more help in repaying loans issued at the beginning of lockdown over a phased period because, in the absence of any great certainty, anything the Government can do to offer some sort of assurances over the future is helpful.

“There’s still a long way to go for many companies before they can be said to have got through this. Clear communication and transparent consultation with businesses will be key in helping us to come out the other side.”

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