Business & Unions Reaction To Latest GDP Figures
Commenting on GDP figures for Q1 2021, published today by the ONS, showing the economy shrunk by 1.5% in Q1 2021,Suren Thiru, Head of Economics at the British Chambers of Commerce(BCC), said:
“While the UK economy contracted in the first quarter, the downbeat headline figure masks a renewed momentum through the quarter from January’s drop in output to an exceptionally strong March outturn as lockdown measures started to ease.
“The decline in economic output in the first quarter largely reflected the squeeze on activity from coronavirus restrictions, which was partly offset by growing business resilience to those restrictions and a monthly boost from the reopening of schools in March.
“The first quarter decline should be followed by a robust rebound in the second quarter as the effects of the release of pent-up demand, as restrictions ease and the strong vaccine rollout, are fully felt.
Alpesh Paleja, CBI Lead Economist, for the CBI said:
“While latest data confirms the economy was hit once again by a renewed lockdown at the turn of the year, the fall in activity was much smaller compared with Spring 2020. Households and businesses have clearly adapted better to working and living under Covid restrictions, despite the brutal cost of doing so.
“A range of indicators, including CBI business surveys, point to a rebound in activity heading into summer – with the economy opening up and pent-up demand waiting to be unleashed. But this is a recovery that will be felt more by some. Undoubtedly, hardest-hit sectors and households have a longer road ahead.
“To inject momentum into the recovery, the government can provide clarity on outstanding issues around re-opening, including social distancing, access to workplace testing and use of Covid-status certification. The time has also come for real global leadership, starting with using today’s B7 recommendations to drive a sustainable recovery from the pandemic and provide the tangible action needed on other big issues including the climate emergency, promoting free trade, and unleashing the potential of digitalisation.”
“However, with the longer-term economic damage caused by coronavirus likely to increasingly weigh on activity as government support winds down, the recovery maybe slower than many, including the Bank of England, currently predict.”
Tej Parikh, Chief Economist at the Institute of Directors, said:
"The UK economy is on course for a bumper bounce back this year.
“The first quarter should mark the low point for the economy in 2021. The lockdown and added costs of navigating new trading terms with the EU limited many businesses' trading activities at the start of the year. Meanwhile, the vaccine rollout, extension of support measures at the Budget, and the roadmap to reopen the economy has helped build directors' confidence for the months ahead.
"As restrictions wind-down further, many firms will increasingly look to re-scale by taking on new hires and making investments, which will support growth. But the lion's share of the UK's rapid recovery in the coming quarters will be led by consumers, with pent-up demand likely to drive retail, leisure, and hospitality spending. If the virus is kept at bay, we could see the economy shoot back to pre-pandemic levels by the close of the year.
"As we near the end of the Government's current roadmap, it is vital that directors have clarity on what to expect after June. The debt hangover from last year will be biting many firms, so advanced guidance on the nature of restrictions going forward is vital to support their continued planning."
TUC General Secretary Frances O’Grady said:
“The last month has shown some signs of recovery. But there is still a long way to go, especially in the hardest-hit industries.
“The government should step in to help the recovery gain speed and build the confidence of employers.
“A sure and fast approach is to give key workers the pay rise they have earned. With more money in their pockets, their spending will help businesses recover faster.”