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East Midlands Chamber News

Signs of growing business confidence despite another fall in GDP, says Chamber – as EU traders continue to face issues

Responding to figures from the Office for National Statistics (ONS) showing UK economic output shrank by 2.9% in January 2021, East Midlands Chamber chief executive Scott Knowles said: “After the 9.9% fall in GDP throughout 2020, these figures illustrate how the economic damage being caused by the pandemic hasn’t let up in 2021.

“It’s no great surprise to see another significant fall in output due to the national lockdown imposed in the New Year, and we know that certain industries – including hospitality, tourism, events, retail and aviation – continue to bear the brunt of this impact.

“The teething issues many businesses have experienced at the border since the end of the UK-EU transition period, as well as the effect of stockpiling goods towards the end of last year, will also have played a key role in numbing trade.

“The figures for February and March will likely paint a similar picture as restrictions remain in place for these sectors and post-Brexit trade disruption continues, but there does appear to be light at the end of the tunnel.

“From looking at the early data from our Quarterly Economic Survey for Q1 2021, it appears the rebound in the economy started when the Prime Minister unveiled the country’s roadmap out of lockdown in late February. It then sped up with a subsequent budget that featured lots of short-term support and longer-term incentives for businesses to lead our economic recovery.

“This means confidence levels about what the coming 12 months will bring are higher than they have been during any point of the past year, which is a big positive as we hopefully approach the final throes of this pandemic.

“However, while we expect to see strong pent-up consumer demand as lockdown eases, it’s important the Government doesn’t get complacent and recognises the lingering economic effects of coronavirus – including elevated consumer and business debt levels – may severely limit the pace of recovery.

“And despite the budget’s largely positive tone, there are still many businesses and individuals who have, through no fault of their own, been excluded from Government support. Many will require help if they are to navigate a difficult few months ahead before the economy is able to fully reopen.” 

Falling exports and imports reflect experiences of East Midlands businesses

Responding to the ONS data showing exports of UK goods to the EU fell by 40.7% in January and imports decreased by 28.8%, East Midlands Chamber director of partnerships and head of international trade David Pearson said: “These figures certainly tally with what we’ve seen in the East Midlands, where exports and imports have taken a significant hit in the early part of this year.

“We’ve seen very minor signs of recovery during February and March, but it’s clear that we won’t return to the same levels of international trade in a matter of weeks or months so we remain cautious.

“The Chamber has helped businesses in our region throughout this time, delivering more than 250 hours of free advice and support to businesses trading with the EU. This covers a vast range of topics – in most cases, we’re finding issues are unique to each company – but there are certainly prevailing problems around rules of origin, VAT and duties.

“The Government’s decision to postpone border checks on certain EU goods, including foodstuff and animal products, by six months until October this year is a positive step to help smooth the transition for UK importers. However, we need to also simplify the process for similar products being exported into the EU.”

For more information on how East Midlands Chamber can provide international trade support, email international@emc-dnl.co.uk or call 0333 320 0333 (option 4).