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East Midlands Chamber News

Double-dip recession may be inevitable, says East Midlands Chamber after latest GDP stats show economy is shrinking

Responding to the latest Office for National Statistics GDP stats that showed the economy shrank by 2.6% in November, East Midlands Chamber (Derbyshire, Nottinghamshire, Leicestershire) chief executive Scott Knowles said: “The latest figures highlight the continued damage being done to the UK economy by the pandemic.

“After six monthly increases following the economic nosedive during lockdown, we are now back into a decline in output, largely driven by the drag on activity from the second national lockdown as businesses in consumer-focused services endured 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 in areas like the East Midlands, the UK economy is likely to have contracted in the final quarter of 2020.

East Midlands economic recovery stalled in Q4 2020

“The Chamber’s Quarterly Economic Survey for Q4 2020, conducted during the November lockdown, unsurprisingly showed the East Midlands economy stalled following a recovery from the summer lows.

Advanced orders were down for a net 16% of the region’s domestic operators and for a net 12% of exporters, while cashflow fell for the fourth consecutive quarter – this time for a net 15% of firms.

“This affects the ability for businesses to grow and, while there were some encouraging signs for investment and recruitment intentions, ushering in the New Year with a third national lockdown means a double-dip recession in the first quarter of 2021 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.

“While the vaccine rollout is clearly the country’s Plan A for ending restrictions, a fit-for-purpose test, trace and isolate system remains critical to keeping the economy moving once the current lockdown ends as we await full vaccination.”