News / Business West
Testing times for businesses amid deteriorating economic outlook
Quarterly economic growth is expected to grind to a halt this year before dipping briefly into negative territory as experts warn of challenging times for businesses.
The British Chambers of Commerce has downgraded its expectations for UK GDP (gross domestic product) growth for 2022 to 3.5 per cent – less than half the 7.5 per cent growth recorded last year – against a deteriorating outlook.
Global events are largely being blamed for the downturn and the UK inflation rate is now expected to reach ten per cent in the fourth quarter of this year, outpacing average earnings growth.
The heightened economic uncertainty and rising costs are also expected to significantly weaken business investment, with 1.8 per cent growth predicted for this year, a sharp decrease from 3.5 per cent in the previous forecast.
Business leaders warn companies and consumers face unprecedented inflationary pressures caused by rising raw material costs, the increase in the energy price cap and upward pressure on energy and commodity prices.
Looking at what this means for the Bristol region, Matt Griffith, the director of policy at Business West, said: “It is vital that government also supports existing strong economic areas like the West Country, and makes sure we have the level of investment in infrastructure, skills, transport and housing we need.
“Recent signals from central government seem to suggest it is not pushing our areas as much as it could on things like housing, providing sufficient employment space and strong local plans. This is not glamorous, but not delivering here risks long term underperformance and sluggish future growth in incomes and jobs for our people.”
Quarter on quarter, GDP is expected to flatline nationally, with no growth expected in the second and third quarters before contracting by 0.2 per cent in the final quarter.
Business experts say this negative outlook reflects a combination of soaring inflation, weak business investment, tax rises and the global economic shocks that were initially caused by Covid and then compounded by the war in Ukraine.
They predict annual UK economic growth will slow sharply to 0.6 per cent for 2023 before recovering slightly to 1.2 per cent in 2024.
Main photo: Josh Rundle
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