Member Article

Chamber reacts as UK economy avoids double dip recession

Business leaders in Coventry and Warwickshire say there is little to cheer over the UK economy avoiding a double-dip recession.

The latest GDP figures show that the economy grew in the final quarter of 2020 by one per cent but, overall, it shrank by 9.9 per cent throughout the year.

Louise Bennett, chief executive of the Coventry and Warwickshire Chamber of Commerce, said the focus must remain on helping businesses survive the crisis but also giving them a clear path to reopening the economy.

She said: “Despite the avoidance of a second recession in quick succession, the figures make bleak reading – but they will come as no surprise.

“This has been the most difficult year any of us can remember with many businesses having to close their doors for significant periods of time and others having to adapt to the changing guidance.

“There is no question that businesses still need support to get through the crisis but it’s vitally important that they also see a roadmap to reopening so that we can start to rebuild our economy.”

British Chambers of Commerce Head of Economics, Suren Thiru, said: “The UK economy recorded stronger than expected growth in the final quarter of 2020 as the squeeze on output from the November lockdown was more than offset by a temporary boost from the release of pent-up demand from the subsequent easing in restrictions, increased activity from the coronavirus testing schemes and Brexit stockpiling.

“Despite avoiding a double-dip recession, with output still well below pre-pandemic levels amid confirmation that 2020 was a historically bleak year for the UK economy, there is little to cheer in the latest data.  

“Modest growth at the end of 2020 is set to be followed by a substantial fall in output in the first quarter of this year as the current lockdown, the unwinding of Brexit inventories and disruption to UK-EU trade flows combine to suffocate activity.

“While the vaccine rollout offers optimism, with the scarring caused by the pandemic likely to crystallise as government support winds down and the prospect of persistent post-Brexit disruption, any recovery may be slower than the Bank of England currently predicts.

“The current drip-feed approach to support measures means firms cannot plan for more than a few weeks ahead. It is critical that the government swiftly implements a package of measures that support businesses and the economy for the whole of 2021, including removing the cliff-edges for business rate reliefs, VAT deferrals and furlough.”

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