The latest economic indicators for the UK economy from the Office for National Statistics (ONS) show 77% of UK businesses are currently trading, with 14% of trading business’ workforce on furlough leave. Their latest figures show that monthly gross domestic product (GDP) rose by 0.4% during October 2020 but was still 7.9% below February 2020 levels.
Output is expected to shrink again in November after England’s second shutdown forced many businesses to close.
October 2020 saw the sixth consecutive month of growth, but the rate of recovery has slowed each month since the largest rise of 9.1% in June 2020. Across services, the monthly growth was driven by health, wholesale, retail and motor trades, and education, while accommodation and food and beverage service activities declined. Within manufacturing there was widespread growth, led by a rise of 6.8% in motor vehicle production. Monthly construction output growth slowed to 1.0% in October 2020, the sixth consecutive month of growth but the lowest rise in that time, with the level of construction output in October 2020 still 6.4% below the February 2020 level.
The figures are gradually improving although it is going to be a long haul. It is clear the hospitality, travel, arts and retail sectors are hardest hit and whilst there are regional grants to support them we believe these sectors will take the longer to recover.
A “No Deal” Brexit will have a negative impact on the economy in early 2021 and any recovery will take longer as a result. The Confederation of British Industry (CBI) predict the UK won’t get back to its pre-pandemic level until the end of 2022 and if there is “No Deal” this could take up to 2024.
Despite the pandemic and the possibility of “No Deal”, we still continue to be impressed with the resilience of our clients and how they have energetically repurposed or pivoted their businesses into new areas, products and services. Please do talk to us about planning for 2021 and beyond, we have considerable experience in helping businesses project their figures forward and perform “What if” analysis to look at a range of scenarios.