12 Sep 2022

Government must work with business to spur growth as economy flatlines, says East Midlands Chamber

Commenting on the Office for National Statistics’ (ONS) latest figures showing UK GDP rose by 0.2% in July 2022, East Midlands Chamber (Derbyshire, Nottinghamshire, Leicestershire) chief executive Scott Knowles said: “Persistent drags on growth are preventing our economy from kicking into action, which is why we’re seeing fluctuations in output on a month-to-month basis.

“While the services sector was the main driver of growth in July, the manufacturing and construction industries experienced a second consecutive fall in output.

“These are among the most energy-intensive sectors, so eye-watering energy bills – combined with rises in costs for people, raw materials and fuel – have led to a very real cost-of-doing-business crisis.

“The UK economy faces serious immediate and longer-term structural issues, which is leading to business confidence trending downwards in the East Midlands, as our Quarterly Economic Surveys continue to illustrate. Inflation is wiping out turnover and profitability for many firms and a record proportion face recruitment difficulties.

Last week’s announcement on support for firms’ energy bills will have provided some reassurance to business and should dampen one of the key sources of inflation, but further details of the scheme are needed to restore long-term confidence.

“The Bank of England faces a delicate balancing act on monetary policy and while inflation is the dominant issue, further interest rate rises could compound the economy’s move towards recession, which must be avoided at all costs.

“With the economic outlook expected to remain challenging for some time, driven by global and local headwinds, it’s crucial the Government works with the business community to come up with policies that will provide headroom and spur growth.

“As well as energy bills support, these should include training-related tax breaks and reforming the shortage occupation list to allow sectors facing urgent demand for skills to get what they need.”