The UK’s Gross Domestic Product (GDP) grew by 6.6% in July 2020, the third consecutive monthly increase, but it has still only recovered just over half of the lost output caused by the coronavirus pandemic on the national economy.
The statistics from the Office for National Statistics (ONS) highlight the impact the easing of lockdown measures have had in recent months. July 2020’s GDP is now 18.6% higher than its April 2020 low. However, it remains 11.7% below the levels seen in February 2020, before the full impact of the coronavirus pandemic.
Commenting on today’s GDP figures for July, ONS Director of Economic Statistics Darren Morgan said: “While it has continued steadily on the path towards recovery, the UK economy still has to make up nearly half of the GDP lost since the start of the pandemic.
“Education grew strongly as some children returned to school, while pubs, campsites and hairdressers all saw notable improvements. Car sales exceeded pre-crisis levels for the first time with showrooms having a particularly
“All areas of manufacturing, particularly distillers and car makers, saw improvements, while housebuilding also continued to recover. However, both production and construction remain well below previous levels.”
July’s statistics followed growth of 8.7% in June and 2.4% in May and a record fall of 20.0% in April 2020.
Rain Newton-Smith, CBI Chief Economist, said: “As more businesses were able to open their doors, the economy grew further in July. But economic growth lost some steam on the previous month, illustrating the continued uncertainty over the shape of an economic recovery ahead.
“The prospect of a second wave is restraining consumer and business confidence, and firms continue to face cash flow difficulties. With government support schemes coming to an end and renewed uncertainty over Brexit, clearly the road back to ‘normal’ is going to be a rocky one.
“A successor to the Job Retention Scheme and a deal with the EU are essential foundations for a near-term economic recovery. Learning the lessons from local lockdowns will also help manage any second wave of Covid, and get growth onto a more sustainable footing.”
How SMEs and private equity will ensure the nation’s recovery
The Office for National Statistics (ONS) has today revealed new statistics that show the UK economy has grown by 6.6% in the month of July. This news will be welcomed by many businesses owners as consumers regain their spending confidence.
The UK’s small and medium-sized enterprises (SMEs) have been affected massively by the COVID pandemic, but many have also been able to pivot quickly and diversify their service offering to see them through the period. There is no doubt that government aids such as the furlough scheme and Eat Out to Help Out initiative will have given the economy a boost, but as these schemes end private investors will be key to ensuring this growth continues.
Luke Davis, CEO and Founder of SME investment firm IW Capital, has commented on options that small businesses should look at to scale and grow despite the COVID recession: “This has been a turbulent period for many businesses across the country, one not experienced for generations, so help and assistance to scale and grow a business out of this time may seem difficult. However, help from government-backed schemes, such as the Coronavirus Business Interruption loans and the furlough scheme, and from the private sector has been crucial for many small firms over the last six months.
“There are fantastic businesses across the country with a huge amount of growth potential that may be slipping through the net if they do not receive vital growth funding when they need it. This is why we are actively looking to invest in these regions and are looking into employing investment directors specifically for each region.
“State-sponsored initiatives and infrastructure investment will be key to giving businesses confidence but the majority of funding is likely to come from private sources. And given that bank lending to SMEs remains a key issue limiting growth, private equity through schemes such as the Enterprise Investment Scheme (EIS) will be crucial to unlocking the growth potential of these firms.
“The small business community and its success is as important to the economy as anything else in the near future. With an economic contribution of over £2 trillion, the success of the UK economy as a whole may in future hinge on the prosperity of SMEs, start-ups and high-growth firms. There is a fantastic range of innovative, growing SMEs that we work with which are likely to drive our private sector forward in the coming years.”