Member Article

Regional business leaders not celebrating GDP figures

Business leaders in Coventry and Warwickshire say record quarterly growth in the UK economy is not a “cause for celebration”.

GDP grew by 15.5 per cent in the third quarter of the year on the back of the massive dip in the second quarter when the country was in the midst of lockdown due to the Coronavirus crisis.

The growth in quarter three still leaves the economy 9.7 per cent smaller than it was prior to Covid-19 and growth slowed in September to just 1.1 per cent.

Louise Bennett, chief executive of the Coventry and Warwickshire Chamber of Commerce, said: “Normally, exiting a recession and record growth would be a cause for celebration but we all know that this is far from the case this time.

“Our economy has recovered some of the fall that took place back in quarter two of 2020 but we are still some way short of pre-pandemic levels.

“Businesses are now under new restrictions as part of ‘Lockdown 2’ which has seen leisure, hospitality and non-essential retail closed again. This will undoubtedly have an effect on GDP in the final quarter of the year.

“Companies across Coventry and Warwickshire, like everyone else, will have been buoyed by the potentially positive news with regards to a vaccine but, right now, we need a plan to get the economy open and functioning until such time that a mass roll-out can take place.” Suren Thiru, Head of Economics at the British Chambers of Commerce (BCC), said: “While there was confirmation that the UK exited recession, the historically strong headline figure masks a loss of momentum through the quarter, as the temporary boost from the release of pent-up demand as the economy reopened gradually faded.

“With output still well short of pre-crisis levels there was little sign of a ‘V’-shaped recovery even before the latest lockdown.

“Although less restrictive than the first, a second lockdown means that output is likely to contract in the fourth quarter. With much of the economy now in a weaker position to withstand periods of extended closure than at the start of the pandemic, the damage to economic activity in the near term may be significant, particularly if restrictions extend beyond 2 December.

“Until a vaccine is rolled out, mass testing remains crucial to getting the economy moving and avoiding further damaging lockdowns.

“With many firms facing a significant cash crisis, increased grant support for those impacted by restrictions is vital to helping the UK economy weather a difficult winter ahead.”

This was posted in Bdaily's Members' News section by Matt Joyce .