Government must seize initiative as UK economy enters recession – Chamber

Business leaders in Greater Birmingham say the government must “seize the initiative” in the forthcoming Spring Budget after new figures revealed the UK has entered a technical recession.

According to data from the Office for National Statistics, gross domestic product (GDP) shrank by 0.3 per cent between October and December.

It's a steeper fall than expected by economists who had forecast a 0.1 per cent contraction.

It followed 0.1 per cent of negative economic growth in the three months from July to September.

A recession is defined as two consecutive three-month periods where the economy shrinks rather than grows.

While previous recessions - such as during the global financial crash of 2008 and 2009 - were long lasting, experts say this one is likely to be mild and short lived.

Raj Kandola (pictured), director of external affairs at Greater Birmingham Chambers of Commerce, said: “This morning’s GDP figures will make painful reading for the Government as the UK economy entered a technical recession following successive quarters of contracting growth.

“The Chancellor will no doubt point to the strides made in cutting inflation as a note of optimism and largely attribute this fall in growth as a result of the Bank of England’s decision to raise interest rates to counteract rising prices.

“But the facts remain that aside from the pandemic, we are seeing the weakest annual growth since the global financial crisis and wage growth continues to drive inflationary pressures.

“Here in Greater Birmingham, firms continue to demonstrate resilience – surveying from our Q4 Quarterly Business Report reveal that the majority of businesses expect their profit levels to stay the same or go up over the next 12 months despite the significant cost pressures they continue to face on a daily basis.

“Now more than ever, the Government needs to seize the initiative at the upcoming Spring Budget and set out a plan that will bolster investor confidence, tackle underlying cost pressures, ease labour market shortages and act as springboard for growth.”

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