Gross domestic product (GDP) is estimated to have grown by just 0.1% in July 2021
ONS figures have revealed that the UK’s economic recovery from Covid-19 has stalled, with GDP growth estimated to have risen by just 0.1% in July 2021.
Many analysts are blaming the impact of the Pingdemic as the main cause behind the sharp slowdown. A huge surge of cases in the run up to the event saw hundreds of thousands of people being asked to self-isolate, leading to a shortage of workers including delivery drivers and hospitality staff.
The UK economy had been steadily returning to normal since the lifting of lockdown restrictions, with July being the country’s sixth consecutive month of growth.
Contributing significantly to the UK’s economic recovery was the arts, entertainment and recreation sectors, which grew by 9% in July – helped by the lifting of restrictions on July 19.
However, according to the ONS, the economy remains 2.1% below its pre-pandemic peak. Service sector activity, which accounts for 80% of the economy, saw no improvement at all in July – despite reporting strong growth of 1.5% in June.
We spoke to SMEs to find out their reaction to the news.
How are small business owners reacting to the figures?
Maddy Alexander-Grout is CEO of My VIP Rewards, a money-saving app. Alexander-Grout said: “The pingdemic wreaked havoc on the economy based on this evidence. And many businesses will have felt this first hand. Looking forward, the threat of another lockdown is the main fear for small business owners, so from that perspective I hope the economy will somehow struggle through.”
The UK labour shortage is contributing to worries
Sectors across the UK are feeling the impact of a labour and skills shortage that is causing huge gaps in the workforce. This has been worsened by the Pingdemic, which has forced many workers to self-isolate.
Gary Parsons is managing director at Talk Staff, a recruitment and HR expert. Parsons said: “It feels like there has been a huge boost in the economy over the past few months, with many businesses positively booming. The question, as ever, is how long will it last? One massive stick in the spokes is the disconnect between businesses wanting to hire and the abject shortage of talent. Unless this gets sorted quickly my concern is that the economy may see a temporary but potentially serious dip.”
Some are calling for more government support..
Kevin Drew, Managing Director of accountancy firm, Ascentant Accountancy. Drew commented: “With an uncertain winter ahead and rumours of firebreak lockdowns, it’s clear that small businesses need more support and the recent announcement of National Insurance increases will do little to comfort either new startups or firms that need to cut costs. Whether as a result of an increase in employer National Insurance or dividend tax, the end of the furlough scheme or having to start to repay Covid support loans, for many small business owners it’s increasingly feeling like a no-win situation.”
There’s also concerns about another lockdown..
Jo Ferreday is managing director at Sheer Edge, an event management company. Ferrday commented: “We’ve already seen mass job losses and venues closing their doors indefinitely. As a business we are fortunate we can support our clients with a whole manner of enquiries, but what about the businesses who cannot support virtual or hybrid solutions? I think whatever happens in the autumn, if the Government shuts us down again, there must be some support for those who cannot trade.”
However, some SMEs are still optimistic about the future
Holly Hinton, owner of web design company, Web Goddess, said: “With more new businesses launching and existing ones improving their online presence due to the pandemic, things are really hotting up in terms of website design and I am busier than I have ever been. I’m definitely more confident than I was at the beginning of summer and I only see this trend increasing.”
