Business leaders in the West Country are urging the government to take “more decisive action” to stabilise the economy as predictions of a recession gain strength.
Britain’s economy unexpectedly shrank in August as factories and consumer services firms struggled, putting the UK on track to contract overall in the third quarter, according to official figures.
The Office for National Statistics (ONS) said on Wednesday (October 12) that gross domestic product (GDP) dropped by 0.3% between July and August – down from growth of 0.1% the previous month – which was downwardly revised from the 0.2% previous estimation. Economists had been expecting zero growth in August.
The latest data means the economy is likely to contract overall in the third quarter, with the ONS confirming there would need to be growth of more than 1% in September to avert a quarterly decline.
It comes amid fears that the UK is heading for a recession as the cost-of-living crisis takes its toll on households and businesses.
Oli Garnett, co-founder of Bristol-based creative agency Something Familiar, said the business community needed “more decisive action” to address the cost-of-living crisis and support small firms.
“Millions of small businesses are at breaking point and are having to enter the battle ahead with the additional burden of loans to repay that were taken out during the pandemic,” he said. “Just as they come up for water, they’re being hit by another giant wave.
“We need strong leadership, but instead we have a Chancellor and PM who seem to have no understanding of the economic carnage they’ve triggered with their hare-brained mini-Budget.”
Chancellor Kwasi Kwarteng has insisted the government’s energy support package and growth plan will “address the challenges that we face”. But the financial market turmoil sparked by his mini-budget has sent mortgage rates soaring, heaping yet more pressure on cash-strapped Britons.
Mr Kwarteng said: “Countries around the world are facing challenges right now, particularly as a result of high energy prices driven by Putin’s barbaric action in Ukraine.”
“Our growth plan will address the challenges that we face with ambitious supply-side reforms and tax cuts, which will grow our economy, create more well-paid skilled jobs and, in turn, raise living standards for everyone,” he added.
The International Monetary Fund (IMF) warned on Tuesday the UK economy could sharply reduce in 2023 as consumer spending catches up with rampant inflation and higher interest rates. It downgraded its forecast for UK GDP growth next year to just 0.3% in 2023 from 0.5% previously pencilled in.
Dave Kelly, co-founder of Bristol-based butcher, Ruby & White, said the government was pushing the UK economy and pound sterling “through the meat grinder”.
“The sausages coming out the other side are about as low quality as it gets,” he said.
Former professional rugby player Ollie Hayes, founder of So Fit Bath, added: “Small businesses in all sectors are being pummelled and yet the clowns in Westminster seem oblivious to the chaos that’s unfolding.
“For millions of small firms, things are looking far more bleak now than during the dark days of the pandemic but the people running this country are totally out of touch. Based on the verdict of the markets alone, the whole lot of them should be red-carded for the economic equivalent of a high tackle.”
