GDP shrinks during March as firms face economic pressures - Chamber

A surprise slump in UK gross domestic product during March demonstrates that businesses are still grappling with some major economic headwinds, business leaders said today.

Although the UK economy marginally grew over the first quarter of the year, there was an unexpected 0.3 per cent decrease in March.

The Office for National Statistics (ONS) said the slump was driven by falls for the retail and wholesale sector while the healthcare sector was also impacted by strike action.

The decline in March came after a flat performance in February and 0.5 per cent rise in January.

Raj Kandola (pictured), director of External Affairs at Greater Birmingham chambers of Commerce, said: “Although it was reassuring to see that the UK had avoided a technical recession, growth remains anaemic as businesses grapple with a series of economic headwinds.

“According to the ONS, bad weather and strike action all contributed to a fall in activity in March as historically high levels of inflation continue to fuel a cost of living crisis as businesses continue to wrestle with labour market shortages and global supply chain challenges.

“Our Q1 Quarterly Business Report revealed that the majority of businesses expect their profits to either stay the same or go up over the next 12 months which points to the underlying resilience many continue to display in these extraordinary circumstances.

“Nevertheless, responsibility rests on the shoulders of the Government to give businesses the confidence they need to invest and grow, especially in light of the Bank of England 's decision to raise interest rates this week.

“Tackling the underlying cost pressures that businesses face on a daily basis, broadening access to the labour market and minimising trade disruption with our European counterparts would all make an immediate impact. ”