Figures released last week by the Office for National Statistics (ONS) showed that the UK economy continued its sharp recovery from the unprecedented effect of the coronavirus pandemic. The economy grew by 6.6% in July, the third month in a row that the economy has expanded. The UK has recovered over half of the lost output caused by the pandemic with the reopening of hairdressers, pubs and restaurants contributing to the growth.
The rate of recovery was slightly smaller in July compared to the previous month with many concerned that this is showing signs that the recovery is slowing down and the strength of the bounce back is fading. The UK still has a long way to go, with the economy still over 11% smaller compared to pre-coronavirus measures being implemented in February.
With new restrictions being put in place limiting gatherings in a social setting to no more than 6 people, as a result in a rise in new infections, this could possible pose a threat to the ‘V shaped recovery’ that many have been hoping for.
Another hurdle to a full recovery will be the winding down of government support measures including the Job Retention Scheme (JRS) which is set to close at the end of October and the Coronavirus Business Interruption Loan Scheme (CBILS).
According to data from the latest Coronavirus Economic Indicator, brought to you by Herefordshire & Worcestershire Chamber of Commerce, in partnership with the Worcestershire Local Enterprise Partnership, over a third of businesses in the two counties expect to reduce the size of their workforce within the next 3 months. The government should see this as a potential barrier to a full recovery and look to extend and adapt current support schemes such as the JRS and CBILS to ensure businesses are supported over a longer period, as well as introducing more significant packages of support for businesses placed under local restrictions.
The figures from the ONS provide optimism and a sense of hope, however they should also be taken as a warning to government, that it faces a significant obstacle that could stall the recovery of the UK economy in the coming months if no further action is taken to help support those businesses who have been greatly affected.
For more information please visit our Coronavirus Business Support Hub here, where businesses can access all the latest guidance and support available.