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GDP Growth Welcome But Tougher Times Ahead

Reacting to the latest ONS figures on GDP for May 2022, David Bharier, Head of Research at the BCC, said:

“Today’s monthly GDP growth figure of 0.5% is welcome news but masks serious underlying issues of growing imbalances within the economy.

“The construction sector continued to show buoyancy with a seventh consecutive rise in monthly growth.

“The services sector grew by 0.4% but the main contributing factor, health and social work activities, was driven by a significant rise in GP appointments. Elsewhere, consumer-facing sectors continue a downward trend with a further 0.1% contraction.

“BCC’s research since the start of the Covid crisis has shown that most small businesses have reported no improvement to cash flow or investment. Uncontrolled inflation has now made it much more challenging to grow back out of the crisis.

“Worryingly, our most recent quarterly economic survey also showed that longer term business confidence measures have begun to fall. The present political instability will have only exacerbated uncertainty among small firms.

“Alongside this, the economy is still facing massive structural issues – including uncertainty about the UK’s relationship with the EU, continued Covid lockdowns in China, supply chain breakdowns, and rocketing energy costs.

“Cutting VAT on businesses energy bills to 5% would go some way to easing the squeeze on firms’ cashflow and give them some room for manoeuvre.”