GDP growth has come in disappointingly below forecast in latest figures released by the ONS (Office for National Statistics). Growth fell from 0.8 percent in January to 0.1 percent in February, with the production and construction sectors both seeing declines while services saw modest growth of 0.2 percent. While monthly GDP is now back above pre-Covid levels the slowdown raises concerns over the impact of inflation and the UK’s rising costs of living and doing business. Suren Thiru, Head of Economics at the British Chambers of Commerce, said: “February’s slowdown is likely to be the start of a prolonged period of considerably weaker growth as rising inflation, surging energy bills and higher taxes increasingly damages key drivers of UK output, including consumer spending and business investment.”
He warned: “The Government must provide urgent financial support, through the expansion of the energy bills rebate scheme, to include small firms and energy intensive businesses, and an SME energy price cap to protect smaller firms from some of the price increases.”
The increasingly bleak outlook puts further pressure on Chancellor Rishi Sunak following widespread claims from business and consumer groups that measures announced in the recent Spring Statement do not go far enough.
Alpesh Paleja, Lead Economist at the Confederation of British Industry (CBI), said: “It’s clear that growth impetus remains underwhelming.
“While the Government took some steps to sustain confidence in our economy in the Spring Statement, they don’t do enough to tackle the current challenges facing firms.
“The only enduring response to these is a relentless campaign for economic growth and productivity, through measures such as capital allowances, R&D reforms and a revised apprenticeship levy.”
More to follow…
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