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East Midlands Chamber News

UK economy statistics for 2020: East Midlands Chamber comments on record GDP fall of 9.9%

Responding to figures from the Office for National Statistics (ONS) showing UK economic output shrank by 9.9% in 2020, representing the worst contraction since records began in 1955, East Midlands Chamber director of policy and external affairs Chris Hobson said: “These figures confirm what we already knew – that 2020 was a historically bleak year for the UK economy as businesses endured persistent struggle.

“To put this data into wider context, the size of the fall in GDP wiped out seven years of economic growth, taking our economy back to its 2013 size, and the scars of forced business closures to combat coronavirus will be felt for years to come.

GDP increases in Q4 2020 - but set to be followed by another dip

“The positive news is that the UK recorded a stronger than expected 1% growth in the final quarter of 2020. This was due to the squeeze on output from the November lockdown being more than offset by a temporary boost from releasing pent-up demand once restrictions eased before Christmas – as well as increased activity from Brexit stockpiling.

“However, while we avoided a double-dip recession, we can expect this modest growth at the end of 2020 to be followed by a substantial fall in output in the first quarter of 2021 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 predicted.

“The current drip-feed approach to support measures means firms can’t plan for more than a few weeks ahead. It’s critical 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.

East Midlands Chamber QES highlights cashflow crisis

“The Chamber’s Quarterly Economic Surveys throughout 2020 showed access to cash worsened for the majority of companies in each quarter. Without the proper support of Government, the billions already spent on protecting firms could be wasted if these businesses are allowed to fail now when we can see the light at the end of the tunnel.

“While these figures paint a gloomy picture, the economy is ready to rebound like a coiled spring as soon as it’s able to – meaning it’s important that we get things opened up as soon as it’s safe to do so and let businesses get on with growing.”