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BCC RESPONDS TO LATEST ONS GDP FIGURES

Commenting on the latest ONS GDP figures, published today, Suren Thiru, Head of Economics at the British Chambers of Commerce (BCC), said:

The latest data confirms that the UK’s economic recovery lost momentum in the third quarter as significant staff and supply shortages limited activity.

“Although monthly output rebounded through the quarter from July’s contraction this is more likely to reflect a temporary boost from restrictions easing, rather than a meaningful improvement in the UK’s underlying growth trajectory.

Hospitality, arts and recreation, and health recorded the strongest improvements as the easing of social distancing restrictions lifted activity. In contrast, construction output declined in the third quarter as severe supply chain disruption weakened its ability to complete orders.

“Business investment remains disappointingly short of pre-pandemic levels, following a modest uptick in the quarter and as such remains the blackspot of the recovery, limiting the UK’s ability to raise productivity and deliver a sustainably high wage economy.

“The third quarter slowdown is likely to be the start of a sustained period of sluggish growth as staff shortages, supply chain disruption and surging inflation increasingly stifles economic output.

“Consequently, on a quarterly basis, the UK economy is only likely to return to its pre-pandemic level next year, behind many of our international competitors.

“With the headwinds facing the UK economy growing, we would caution the Bank of England against raising interest rates in the near term to avoid destabilising an already brittle recovery.

Read the full ONS GDP data here

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