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News

South West businesses need long-term plan as recession looms

Businesses across the region are being warned to prepare for difficult times ahead after new data shows the UK economy fell in technical recession at the end of last year.

According to new data published by the Office for National Statistics, GDP fell 0.3% in the last three months of 2023 compared with the previous three months. This followed a 0.1% decline in the third quarter.

As explained in the ONS’s Communicating the UK economic cycle methodology, a ”technical” recession is defined as two or more consecutive quarters of contracting output.

Stuart Elford, CEO of Devon & Plymouth Chamber of Commerce, said: “If the alarm bells about the prospect of recession weren’t already ringing, they should be now.

“Businesses in the South West have spent the past few years battling the quadruple threat of Brexit, the pandemic, inflation and a labour market that makes recruitment extremely difficult.

“On top of that, our region suffers not only from historic underfunding of key infrastructure – like our frail rail link – but a disproportionately high number of businesses in sectors, such as hospitality, on the front line of crisis facing our economy.

“The Budget is on the horizon and we dearly hope for a sustainable, long-term economic plan that helps us begin to build again. It cannot be filled with short-term tricks that simply appease an electorate in a General Election year.”

Alex Veitch, Director of Policy and Insight at the British Chambers of Commerce, added: “A contraction in GDP for the final quarter of 2023 means the UK economy is in technical recession.

“Businesses were already under no illusion about the difficulties they face, and this news will no doubt ring alarm bells for Government.

“The BCC’s last Quarterly Economic Forecast suggests annual growth below 1.0% for the next two years as firms remained gripped by uncertainty and the twin perils of high inflation and interest rates remain.

“The Chancellor must use his Budget in just under three weeks’ time to set out a clear pathway for firms and the economy to grow.

“Businesses are crying out for a long-term economic plan that reduces the cost pressures they are facing and unlocks the investment they so sorely need.”

More detail on the ONS data can be found here.

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