Economic growth returning as July figures rise by 6.6%
The latest figures from the Office for National Statistics (ONS) show three months of continued economic growth as the UK emerges from lockdown restrictions. With a sharp 6.6% rise in economic activity through July, this marks the third consecutive month of economic growth for the country as businesses adapt to the post-COVID landscape.
The hospitality and automotive industries have fared particularly well, seeing significant growth as the economy re-opens. As businesses strive to make up ground lost during the peak stages of the pandemic, entrepreneurs in these sectors stand at the vanguard of the country’s economic recovery.
Research consultancy Capital Economics report a 140.8% surge in the accommodation and food services sector between June and July, thanks in part to an increased demand for ‘staycations’ as the international travel industry gets to grips with COVID travel restrictions and rapidly changing quarantine rules. In particular, the ONS reported a rise in demand for campsites, cottages and caravan parks, suggesting that small and medium-sized businesses such as these stand to make the greatest gains in the changing economic landscape.
While August figures are yet to be published, Chancellor Rishi Sunak’s Eat Out To Help Out scheme is predicated to have encouraged further gains for the hospitality sector. As this scheme has now drawn to a close, private investors are able to bridge the gap and ensure the economy’s growth continues by investing in SMEs – who make up 99% of the UK’s private sector and are therefore intrinsically tied to the nation’s recovery. Schemes such as the Enterprise Investment Scheme (EIS) will be crucial in incentivising investors, by providing tax-efficient opportunities.
Indeed, SMEs have unique opportunities for growth as the country moves out of recession. While many larger, established corporations in industries from retail to travel face the economic impact of over-expansion or inflexible high-street centric business models, smaller businesses have the agility and flexibility to meet the demands of post-COVID economy head on.
In spite of economic forecasts at the height of the pandemic, there is much cause for optimism. While the economy is undoubtedly smaller than pre-pandemic levels, over half the output lost has been already been recovered. Encouragingly, official figures from the ONS show a sharp growth in monthly GDP, suggesting that the third quarter could see an official end of recession as the economy witnesses record growth.
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