Responding to today’s ONS figures on the first estimate of GDP for Q2, David Bharier, Head of Research at the BCC, said:
“Today's 0.1% fall in GDP data is yet another signal that the UK economy is moving in an alarming direction.
“While some consumer-facing industries have benefited from further withdrawals of Covid restrictions on travel, the retail sector saw a 1% decline in the quarter, reflecting the unprecedented pressures from inflation and global supply chain disruption.
“The 0.2% fall in real household consumption reflects continued weakness in consumer confidence and a mounting cost of living crisis.
“Business investment remains a serious challenge. While investment in construction has increased, other forms of investment, including for machinery and equipment, continue to fall.
“Since 2021, our research has been flagging the damaging impact of inflation, it is wiping out many firms' profit margins and threatening their long-term growth.
“Supply constraints caused by global Covid lockdowns and conflict in Ukraine, coupled with soaring energy costs, have created a perfect storm that many small businesses are struggling to weather.
“Worryingly, our research is also pointing to decreasing business confidence as fewer firms expect to see any turnover growth in the next twelve months.
“That’s why it is becoming critical for the Government to take action as soon as possible. They must immediately cut the VAT on businesses’ fuel bills to 5%. The longer the economy is left to drift towards the danger zone the harder it will be to rectify.”