Partner Article

Chamber reacts as GDP decline leaves UK on the verge of double-dip recession

Businesses in Coventry and Warwickshire will need more help to survive as new figures showed the UK is heading for a double-dip recession.

Figures showed that GDP – the measure for economic output – dropped by 2.6 per cent in November meaning the final quarter of the year is expected to see an overall fall.

And, with a new lockdown announced at the start of January and more businesses having to close, it’s likely that the first quarter of 2021 will see another fall in output, which would mean a second recession in the space of a year.

Louise Bennett, chief executive of the Coventry and Warwickshire Chamber of Commerce, said: “The drop in GDP in November was expected as it was the period when the second lockdown was in place and it only serves to show just how damaging Covid is on our businesses.

“We’ve begun 2021 in lockdown and, therefore, the economy is not going to be able rebound while so many businesses are lying dormant.

“It’s vitally important that firms are given the support to survive but also the reassurance that, if they come through this very challenging period, that there is a plan to help them grow once lockdown ends.

“The vaccines have given us all hope but it’s not clear how and when they will lead to a return to some kind of normality so it’s vital that firms know that there is going to be help available and also a plan that allows the economy to open up as quickly as possible.

“Many businesses who made themselves Covid-secure have remained closed for months now – particularly in our leisure, hospitality and events sector – and they need to be able to trade again as soon as possible.

“As not-for-profit organisations at the heart of business communities, Chambers of Commerce across the UK have been at the forefront of supporting businesses through the pandemic. As trusted sources of the latest information and guidance, we will continue to support our members through the on-going challenges.”

British Chambers of Commerce Head of Economics Suren Thiru said: “The latest figures highlight the continued damage being done to the UK economy by coronavirus.

“The decline in output in November was largely driven by the drag on activity from the second lockdown, with consumer-focused services firms, who are most exposed to lockdown restrictions, enduring a particularly difficult month.

“With any post-lockdown rally in output in December constrained by the tougher tiered restrictions, including the introduction of tier 4 measures, the UK economy is likely to have contracted in the final quarter of 2020.

“A third lockdown means that a double-dip recession in the first quarter of this year may be inevitable, particularly if the current post-Brexit disruption persists through the quarter.

“A clear and comprehensive plan is urgently needed to support the economy throughout this year. This should include closing the current gaps in government support and providing more significant grant funding to support cash strapped businesses. A fit-for-purpose Test, Trace and Isolate system remains critical to keeping the economy moving once the current lockdown ends.”

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