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East Midlands Chamber News

GDP stats February 2021: National picture of modest recovery belies strong East Midlands performance as economy reopening continues, says Chamber

Commenting on the latest figures from the Office for National Statistics (ONS) showing how the UK’s gross domestic product (GDP) rose by 0.4% in February, following a 2.2% drop in January, East Midlands Chamber (Derbyshire, Nottinghamshire, Leicestershire) chief executive Scott Knowles said: “The latest data shows a modest national return to growth in February but perhaps doesn’t fully reflect the improving sentiment we’re detecting across the East Midlands business community despite recent struggles.

“The national pick-up in output in February seen nationally was experienced in the East Midlands, with a broad-based improvement seen across the region and growth recorded across a number of key sectors, including retail and manufacturing.

“It seems the clarity provided by the Prime Minister’s announcement in late February of a roadmap for reopening the economy also helped support output towards the end of the month.

“The national picture of a steady recovery unfolding is supported by the findings of our latest Quarterly Economic Survey for Q1 2021, which received a record 540 responses from businesses across Derbyshire, Leicestershire and Nottinghamshire between 15 February and 8 March.

“It found that a net 53% of East Midlands businesses expect their turnover to improve over the coming year and a third (net 35%) anticipate a rise in profits, while investment and recruitment intentions are also on the up

“This is largely because the roadmap, successful vaccine rollout and a broadly positive response to the spring budget mean businesses can finally see a light at the end of the tunnel and plan ahead for the future – with confidence now at the highest level since before the 2019 general election.

“However, we also found that cashflow remains an issue and was down for the fifth consecutive quarter. In Q1, a net 14% reported a decline in access to cash, illustrating to Government the imperative of continuing to support firms if we are to realise the strong economic recovery that has been predicted due to pent-up consumer demand as restrictions ease.”

UK-EU trade recovers after January dip

On the ONS UK-EU trade figures for February 2021, which showed UK exports increased by 46.6% since January but remained 12% below levels a year earlier, Scott added: “Although there was a rebound in UK goods exports with the EU, much of this may reflect an unwinding of a number of temporary factors that weighed on the January downturn, including the running down of pre-Brexit stockpiling.

“Our Q1 2021 Quarterly Economic Survey showed that while UK activity has recovered relatively well, international activity continues to trail behind with a net 9% of East Midlands businesses reporting a decline in overseas sales during the quarter.

“Crucially, four in 10 witnessed a drop in activity with the EU, which remains the region’s most significant trading partner.

“However, while international traders in the East Midlands continue to encounter significant disruption and difficulty in UK-EU trade flows, many are now finding a way around those and improvements are happening incrementally.

Confirmation of a freeport at East Midlands Airport in the spring budget last month will also provide a boost to international trade confidence due to the tax and inward investment benefits this will bring.

“Despite these positives, it’s important we continue to see improvements in trade flows over the coming months. Getting back around the table to thrash out the remaining structural problems in the UK-EU trade deal should be a priority for both parties.”

To read the full QES Q1 2021 report, click here.