Why we need a comprehensive rebuild strategy

Alistair Tudor, Operations Manager, Somerset Chamber of Commerce, on what the future holds for businesses in the West

WHILE the UK economy remains on course for an historic revival this year (albeit from historic lows), a loss of momentum is being forecast for the remainder of the year as staff shortages, supply chain concerns and rising cost pressures limit output in many sectors.

To date, the release of pent-up consumer demand post lockdown and increased Government spending has helped to drive a substantial surge in economic activity.

But according to the latest figures from the British Chambers of Commerce (BCC), business investment is likely to be the weak point of the recovery which, in turn, could undermine the UK’s ability to raise productivity and increase long-term growth prospects.

The BCC predicts UK GDP growth for 2021 of 7.1%, which, if realised, would be the strongest since official records began in 1949. But it is projected to slow into the autumn as staff shortages and supply chain disruption partly limit the gains from the lifting of restrictions in July.

Business investment is forecast to decline by 2.5% this year caused by the damage done to firms’ finances by the pandemic, a more onerous tax regime and concerns over the potential for future Covid restrictions. These factors are expected to weigh heavily on investment intentions, despite the introduction of the super-deduction incentive.

Consequently, business investment is forecast to remain 5.4% lower than its pre-pandemic level by the end of the forecast period in Q4 2023. In contrast, consumer spending is projected to be 5.1% higher than its pre-pandemic level over the same period.

Looking further ahead the prediction is that the UK economy will return to its pre-pandemic level in Q1 2022 with growth of 5.2% forecast for 2022.

The prospect of record economic growth this year underscores the resilience of the UK economy and showcases the hard work of businesses so it’s vital that companies across the country are given every opportunity to succeed.

The Chamber network has called on the Government to draw up a comprehensive rebuild strategy to safeguard the recovery. This will give clarity and confidence to thousands of businesses ensuring that recovery is built on the solid foundations of business investment.

Bold steps are needed to encourage both domestic and inward international investment, including delivering on the BCC’s longstanding call for fundamental reform of the broken business rates system.

But despite the pressures faced by many local businesses, many have thrived in the face of adversity, and Somerset Chamber is encouraging businesses to celebrate their many achievements by entering the Somerset Business Awards 2022.

Businesses across the county have worked hard to recover from the challenges of the last 18 months and the awards are the perfect way to recognise and honour those achievements. Now in their 17th year, the awards are free to enter and businesses do not need to be a member of Somerset Chamber to take part. There is also no limit on the number of categories businesses can enter.