Member Article

Coventry and Warwickshire business leaders react to small rise in GDP

Business leaders in Coventry and Warwickshire say there is still a ‘long way to go’ before the economy recovers after national statistics showed a slight improvement in February. GDP – the measure of economic output – grew by 0.4 per cent in February but the economy is still 7.8 per cent smaller than when the Covid-19 crisis began.

The figures, from the Office for National Statistics, also showed that exports to the EU from the UK had recovered after a steep drop in January but were still weaker than last year.

Sean Rose, policy officer at the Coventry and Warwickshire Chamber of Commerce, said: “This very slight improvement in GDP in February is positive news but there is still a long way to go before we can really start to talk about a full economic recovery from Covid-19. “Restrictions are starting to be lifted but, even if the roadmap is followed as set out by the Prime Minister earlier in the year, there are still a couple of months of restrictions being in place which will be a drag on growth.

“Companies across Coventry and Warwickshire are looking forward to returning to being able to do business freely in the next few months and, even then, it’s unclear just how quickly the economy will recover due to a range of factors.

“It’s positive news for our exporters that trade picked up with the EU after the big fall in January but, again, it remains to be seen whether this will be the start of an ongoing uplift or if it was an inevitable bounce back after such a major drop.”

British Chambers of Commerce Head of Economics Suren Thiru, said: “The latest data confirms a modest return to growth in February. However, coming after a contraction in January, it does little to alter the prospect of a downbeat first quarter for the UK economy.

“The pick-up in output in February reflected a broad-based improvement in activity with all the main sectors recording an increase in growth. The clarity provided by February’s announcement of a roadmap for reopening also helped support output in the month.

“The release of pent-up demand following the easing of restrictions and the strong vaccine rollout will boost activity. However, hope of a sustained consumer-led revival may prove too optimistic as the economic scarring caused by Covid may trigger a renewed reluctance to spend as government support winds down.”

He added: “Although there was a rebound in UK goods exports with the EU, this may reflect an unwinding of a number of temporary factors that weighed on the January outturn, including the running down of pre-Brexit stockpiling, rather than evidence of an underlying improvement in UK-EU trade flows.

“Businesses continue to encounter significant disruption and difficulty with many firms reporting serious structural issues which, if not addressed, will weigh on UK economic prospects for some time to come.

“The UK and the EU must get back around the table to thrash out the remaining structural problems in the UK-EU trade deal and focus on long-term improvements to the flow of trade between them.”

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