Intervention needed as cost-of-living crisis begins to bite - Chamber

Business leaders in Birmingham today have called for immediate fiscal intervention as the UK economy shows signs of contracting due to the impact of the cost-of-living crisis, according to the latest GDP figures.

Despite a strong start to the year with the lifting of national restrictions, the cost of living crisis has begun to bite as gross domestic product (GDP) fell by 0.1 per cent in March 2022, after no growth in February 2022 (revised down from 0.1 per cent growth).

Services fell by 0.2 per cent on the month and was the main contributor to March 's fall in GDP, reflecting a large decrease (15.1 per cent) in the wholesale and retail trade and repair of motor vehicles and motorcycles industry.

Production also fell on the month by 0.2 per cent, falls which were partially offset by construction, which grew by 1.7 per cent.

Output in consumer-facing services also fell by 1.8 per cent in March 2022 following a 0.5 per cent (revised down from 0.7 per cent) growth in February 2022, compared with non-consumer facing services which grew by 0.2 per cent following a 0.1 per cent fall in February (revised down from 0.0 per cent).

Monthly GDP is now 1.2 per cent above its pre-coronavirus (COVID-19) pandemic level (February 2020).

Raj Kandola (pictured), head of policy and strategic partnerships at Greater Birmingham Chambers of Commerce, said: “It 's clear the cost-of-living crisis is starting to bite as the economy contracted in March following a strong start to the year as national restrictions were lifted.

“A healthy level of consumer spending drove activity in January, however, record levels of inflation coupled with spiralling energy costs have clearly dented consumer confidence and increased cost pressures for businesses across the region - a trend which resonated throughout our latest Quarterly Business Report.

“The Queen 's Speech contained ambitious long-term plans to strengthen the foundations of the economy, but today 's results underline the need for immediate fiscal intervention.

“Cutting levels of VAT coupled with reversing the recent increase in National Insurance levels would offer an immediate a boost to cash strapped businesses and give them the breathing space they need over the coming months. ”

Read the Chamber 's Quarterly Business Report for Q1 here

Read our latest blog on what the Queen 's Speech means for businesses