East Midlands Chamber Chief Executive Scott Knowles comments on today’s economic update for the UK.
Commenting on GDP figures for Q1 2021 – published today by the Office for National Statistics (ONS) and showing the economy shrank by 1.5% in the first three months of this year, making it 8.7% smaller than it was before the pandemic – East Midlands Chamber (Derbyshire, Nottinghamshire, Leicestershire) chief executive Scott Knowles said: “While the UK economy contracted by 1.5% 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 – which helped the economy grow by 2.1% in March, the fastest monthly expansion since August.
“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.
“This national picture of a steady recovery unfolding is reflected in the East Midlands. Our latest Quarterly Economic Survey for Q1 2021 reported a net 53% of businesses in Derbyshire, Leicestershire and Nottinghamshire expect their turnover to improve over the coming year and a third (net 35%) anticipate a rise in profits.
“Meanwhile, investment and recruitment intentions are also up despite the cashflow issue that has persisted over the past year.
“This suggests high business confidence about what the rest of this year will bring, although it does come with a warning sign. With the longer-term economic damage caused by coronavirus likely to increasingly weigh on activity as Government support winds down, the recovery may be slower than many, including the Bank of England, currently predict.”
