GDP figures 'slightly surpass' expectations - Chamber

Business leaders have said that new gross domestic product (GDP) figures have “slightly surpassed ” market expectations, despite the Covid crisis.

According to the Office of National Statistics, UK GDP estimated to have fell by 2.9 per cent in January, as Covid restrictions hampered economic activity.

Falls in consumer-facing services industries and education drove a contraction of 3.5 per cent in the services sector in January. Output in the production sector also fell, by 1.5 per cent, after manufacturing contracted for the first time (by 2.3 per cent) since the initial fall in output last April.

But, the construction sector grew its output by 0.9 per cent, attributed to a growth in new work.

Figures this January were 9 per cent lower compared to levels in February 2020.

Paul Faulkner, chief executive of the Greater Birmingham Chambers of Commerce, said that the next challenge is to avoid any long-term economic scarring from the crisis, as restrictions are set to ease in coming months.

He said: “This morning 's results have slightly surpassed market expectations as economic output fell less sharply than expected in January.

“In a month when non-essential shops were forced to closed, hospitality venues were closed and of course, millions of children were schooled at home, it was no surprise to see the service sector act as the main drag on growth at the start of the year.

“Nevertheless, we can 't deny the fact that economic output is still someway short of its pre-pandemic levels and clearly it 's going to be some time before we see a revival across all sectors.

“It 's a similar picture locally; early analysis from our latest Quarterly Business Report suggests business confidence is starting to climb, perhaps driven by optimism related to the easing of the national restrictions and the positivity generated by the rapid rollout of the vaccine.

“It was pleasing to see the Chancellor had heeded a number of the calls we made in our Back our Businesses Plan and used the Budget to offer the short term support businesses so desperately need to survive the next few months - however the challenge to avoid any long term economic scarring still persists and one which will become more pressing as restrictions ease.

“We also saw the Government release its latest trade statistics for the start of the year and it was no surprise to see exports to the European Union taking a drastic fall as border disruption continues to bite - hopefully this will act as a spur for policy makers in Westminster to set out a long term plan on how they will improve trade flows between the UK and it 's closest trading market.

“As always, our International Team is on hand to offer guidance to those firms impacted by Brexit related disruption and offer support to those businesses that are looking to expand their international reach and are unsure as to how to go about it. ”

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