UK GDP data: reaction from small businesses

ended 10. June 2021

Newsflash: The Office for National Statistics (ONS) estimates the UK economy grew by 2.3% in April 2021, the fastest monthly growth since July 2020, as government restrictions affecting economic activity continued to ease. The data was marginally stronger than analysts had predicted.

The service sector was particularly robust, growing by 3.4% in April 2021 as non-essential retail reopened and high streets once again came to life.

April GDP is still 3.7% below the pre-pandemic levels seen in February 2020, but is now 1.2% above its initial recovery peak in October 2020. Other key takeaways from the ONS this morning:

  • Output in the production sector fell by 1.3% in April 2021, the first fall since January 2021 as three of the four sectors contracted.
  • Within production, mining and quarrying output contracted sharply, by 15.0%, in April 2021 because of planned temporary closures for maintenance of oil field production sites.
  • The construction sector contracted by 2.0% in April 2021 following a strong March, with new work slowing down faster than repair and maintenance.

Below are reactions from small businesses around the UK to the April GDP data.

14 responses from the Newspage community

"April and May have been absolutely bonkers. As a staycation business, we are lucky enough to have been inundated with bookings, and very fortunate that BoJo has allowed holidays to take place across our green and pleasant land. "However, the hospitality industry is already on its knees with a reduced workforce (cheers Theresa May for scrapping our phenomenally brilliant seasonal workers from across Europe. Oh and Brexit). "A battle doth commence betwixt exhausted restaurant owners, cleaning companies on their knees, and pooped pub landlords to secure the hallowed British seasonnaire. Elevated hourly wages and even golden handshakes for lasting the season are being offered to lure people into the industry. "Currently feeling bright about the UK economy like the buoys that mark a sailing race, bobbing up and down in the storm and weathering the battle against wind and tide. But come the Autumn I expect we will need to batten down the hatches."
"I have had the best year financially since I started (2015) - but emotionally? Exhausting. The coronacoaster has been a terrifying ride that just keeps on giving. "Excluded from any support, it's just as well I was able to build on my previous track record to bring new clients into the world of tenders and grant funding (hardly any of the latter, a boom of the former) to secure them much needed contracts during this year. "April and May have seen a continuation of that trend, but I get the feeling that many SMEs are tired and still worried - we really don't have the reserves for another lockdown and we are very wary of the news. However, trying to be confident even when we are not sure, I hope our resolve and passion will win the day. SMEs are the lifeblood of the economy, after all."
Star Quote
"The light at the end of the tunnel started to get a bit brighter for me in April and May. April saw things start to pick up and in May I invoiced more than for the final eight months of 2020 added together. "I’ve also just delivered my first face-to-face workshop since March 2020. Leaving the house at 7am to drive to a venue and run a session for eighteen people in 3D rather than through a screen was quite a weird feeling. "As a sole director, I’ve had absolutely no support. The past 15 months have been incredibly difficult. It’s still tough out there but I’m starting to see some opportunities building."
"For us, in April and May, it felt as if the world was waking up. We are a training company and have gone from losing huge amounts of money last year to feeling extremely positive about our future. In fact, we've been inundated with requests and bids. "Our staff have come back from furlough but I can see potential huge issues ahead with people who have been furloughed for over a year: remotivating them, integrating them back into the workplace and getting their performance back to normal. "I also know organisations who have been hanging on to furloughed staff to give them an income but will not be able to re-employ them at the end of the scheme. My concern is that the unemployment figures will soar."
"Business appears to be absolutely booming and we're hitting the recruitment trail again this month, having already grown from two staff to 15 in the past year. May was comfortably our best month ever as a business and we've already nearly surpassed those figures for June. "Admittedly we are riding the crest of a wave with a very bouyant housing market for our main mortgage business but our new side projects like will writing and estate planning are generating profits already just two months after launch. "I'm incredibly positive about the economy. People have cash to spend and are keen to do so and, if you are an agile business ready to adapt to how the public want to deal with you (for example we were early adopters of zoom and embrace talking to our audience on social media), there is profit to be made. "Dinosaurs who won't adapt though are going to struggle. Maybe this is a good thing as it means more innovation and better outcomes for clients and customers alike. "We hear lots of talk about whether the roof is going to fall when furlough ends. Frankly I doubt it. It's so hard to find good recruits at the moment compared to a year ago. If anything, maybe the long-term furloughed will end up in the arms of progressive, agile and growing businesses."
"Our sales have been strong since re-opening our coffee shops, despite the ongoing restrictions, with certain stores performing much stronger than others depending on locality. Our communities have been extremely keen to get back through our doors and experience genuine hospitality once again. "The frustrating part is having to follow so many more processes to ensure we operate to the very high (higher than non-essential retail) regulations. The above, alongside our reduced capacity due to social distancing, does minimise the potential for a quicker recovery by reducing profitability. "We're optimistic because there is no joy in being any different and we will make the best of whatever situation we have presented to us."
"After a very hard and difficult few months the tail end of last year, we've been busier than Santa on Christmas Day, and will soon be recruiting to support that growth, which is a good feeling. "Equally, there's still a lack of trust across the business community with regard to what happens if there is another lockdown. Will businesses cope and, when furlough finishes, what is festering under that sticky plaster?"
"As an SME providing software to the public sector, the seismic impact of Covid-19 on Local Authority finances is becoming ever more apparent. Huge budget cuts announced by councils up and down the country are having a massive impact on our business, and doubtless many other suppliers to the public sector. "Our lead time from quote to order has risen dramatically and is now running at twelve to eighteen months (a near 50% increase). This is due to an infinitely more stringent procurement environment across local government, as financial caution and budgetary constraints come to the fore. "Once again, a lack of funding is bringing into clear focus the long-standing unwillingness of successive governments to get to grips with the issue of properly funding social care and other vital services."
"We’ve had a really busy April and May, fielding new enquiries and taking on new business. For the first time it feels like the promised ‘bounce back’ might actually be happening. However, it’s a very tenuous positivity. "All being well, all the increased activity we’ve been experiencing is great news for the economy, but we still have to hit the 21 June milestone successfully. With the Indian variant of Covid picking up pace, there’s no saying what will be announced on the 21st, which could throw everything up into the air once again. "The end of the furlough scheme and the announcement on the 21st of June are intrinsically linked. Businesses that are so positively stepping forwards right now could have the rug pulled from under them if each hand by the Government isn’t played exactly right."
"My business is absolutely BOOMING! Things were quieter towards the tail end of 2020, but come January 2021 companies were ready and raring to go. I think as so many businesses made their marketing teams redundant last year, they are now looking to fill those holes and are looking to agencies and freelancers to plug the gaps. "Although conscious that slower economic recovery may actually be better for my business, I'm positive about the future. I'm sure many other businesses feel the same, but no one wants to be the one to say it out loud."
"Like Alan Partridge, the UK is bouncing back. "Property prices are booming and demand from buyers has kept agents and brokers on their toes for months. Even with the Stamp Duty deadline just around the corner, the market seems to be holding up. "But as we approach an uncertain Freedom Day, the rest of the economy hangs in the balance. The end of furlough will reveal the businesses that have been propped up by Government schemes, and we'll likely see unemployment figures rise. "Can a Euros win give us Brits the Blitz spirit we need to carry on spending? Or will we see a slump once state support ends? Time will tell, and we don't have much time to wait to find out."
"April and May saw our bookings return to pre-Covid levels, as business confidence continues to increase. "During the same period last year, we saw our bookings plummet by 60%, so April 2021 has certainly shown reassuring signs of life in the wider economy. "We have been fortunate enough not to have used the furlough scheme, but when it does end, some companies may, regrettably, not survive. "However, over the past year we have seen businesses embrace technology to facilitate growth, and these companies — the ones that have adapted and innovated — will continue to thrive. "The shortfall in materials, both raw and tertiary, is a problem. For example, in the technology sector, we’ve already seen pc and hardware companies unable to get microchips. It will likely result in galloping inflation. It's actually already here, which puts pressure on Governments. The big question will be what they do with the underlying interest rates. If they raise them, companies and consumers alike will feel the pain."
"April and May have seen a return to high and healthy trading levels in the domestic cleaning sector, and we expect this to continue at least until late autumn when the furlough scheme ends. After that, who knows? "Overall, there is more confidence among customers, franchisees and staff and the result is longer term relationships as opposed to fickle and changeable one-offs. Long may it continue."
"Hopefully, life is getting back to normal and footfall will start to increase over the next few months. April was amazing when we first opened, but it has dwindled off again. I feel this is because customer are still a little nervous to be out and about. Also people's routines have completely changed over the past year. It will take time for them to start to shop locally again rather than online."