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11th August 2023

Chambers react to monthly and quarterly GDP figures

Paul Butterworth, CEO at Chambers Wales South East, South West and Mid, said: 

“Today’s announcement that GDP grew by 0.5% in June and by 0.2% in Q2 is a small step in the right direction and shows the resilience and flexibility of Welsh enterprise. However, businesses still need support to get through this difficult economic period.  

“This is better news than expected but the minimal increases show that long-term economic growth is still uncertain. Although the ONS has estimated monthly GDP to be 0.8% above its pre-COVID levels, businesses in Wales are now facing a different trading landscape which includes high interest rates and inflation as well as a tight labour market. 

“The construction, manufacturing and hospitality sectors are all facing major difficulties, especially in securing people with the right skills – it’s the biggest barrier to growth for these SMEs. 

“These pressures also continue to be a concern for businesses in Wales according to our Quarterly Economic Survey for Q2 and could factor into a hesitancy to invest in training, equipment and innovation, hampering longer-term growth. 

“Through the challenges of the last few years, businesses in Wales have shown resilience and agility but further clarity and action by policymakers to tackle economic pressures like inflation and interest rates, skills development and investment opportunities is needed to enable businesses to thrive.” 

David Bharier, Head of Research at the British Chambers of Commerce, said:

Today’s first estimate for Q2, showing GDP grew by 0.2is better news than expected, but the UK economy remains in a precarious place. Businesses are continuing to face a worrying mix of high inflation, rising interest ratesa tight labour market, and global economic uncertainty.

Today’s data is in line with our Quarterly Economic Forecast which expects just 0.3% for the whole of 2023. While the UK remains on course to avoid a technical recession, small movements in one direction or the another won’t mean much for many firms facing the toughest trading conditions in years.

Our latest Quarterly Economic Survey shows that most SMEs continue to report no improvement to investment, cash flow, or sales. Worryingly, 41% of businesses are now concerned about the impact of rising interest rates.

“UK businesses are very adaptable, but they are looking for clear direction from the government and the Bank of England, particularly on interest rate policy and a long-term plan to unlock investment.”

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