Tim Clark, joint managing partner at Thames Valley law firm Blandy & Blandy looks at some of the recent news that may provide businesses, based in and around the Thames Valley, with a welcome boost.
The Office for Budget Responsibility (OBR)
As highlighted by Rishi Sunak in the Spring Budget, the OBR’s latest forecast predicts that the UK economy will return to pre-pandemic levels by next Summer, six months earlier than it has previously suggested.
While the unveiling of Boris Johnson’s ‘cautious roadmap’ for the coming months has led the OBR to revise its growth forecast for 2021 (to four per cent from 5.5 per cent), it anticipates GDP growth of 7.3 per cent in 2022, the highest rate seen since the 1940s.
Unemployment is also expected to peak at 6.5 per cent, much lower than the 11.9 per cent forecast by the OBR last July, and below the peak that followed the global financial crisis. This, no doubt, is helped by the extension of the Furlough Scheme again.
The Chancellor did caution that by 2026 the economy may still be three per cent below the levels expected prior to the pandemic and the UK’s borrowing now stands at more than 100 per cent of the value of total economy – a level not seen since 1958 – but the cost of borrowing is at least at a record low.
The Bank of England’s Monetary Policy Report
As the Bank of England voted to hold interest rates at 0.1 per cent last month, it also predicted that economic growth will ‘recover rapidly’ in 2021, thanks to increasing consumer confidence and spending as a result of the vaccination programme that has so far been so successful.
The Bank’s Monetary Policy Report for February suggests that GDP increased in the final quarter of last year, to a level around eight per cent below that of 12 months earlier and described the outcome as ‘materially stronger than expected’ in its November report.
Obviously, the current Lockdown will take its toll and, in this quarter, the bank predicts a drop in GDP of four per cent.
That is not as severe as the drop seen during the first national lockdown last Spring, reflecting how the country has been able to adapt, during this lockdown which has, of course, been harder on some sectors than others.
Despite the more positive news, the report did caution: “The outlook for the economy remains unusually uncertain. It depends on the evolution of the pandemic, measures taken to protect public health, and how households, businesses and financial markets respond to these developments.”
The Good Growth for Cities Index
PWC/Demos’ recently published Good Growth for Cities report ranks Reading second only to nearby Oxford in a list of UK cities best placed to withstand the economic shock resulting from the pandemic, and to stage a strong recovery.
The index is based on Reading’s sustained success in recent years when it comes to job and business creation, income levels, quality of life, health and having a skilled workforce. It says that Reading has been comparatively less affected than many areas of the UK, ranking it 10th in the country.
Employment data shows that furlough leave has been much more restricted than in some areas of the country, whilst job vacancy rates in certain key sectors remain strong.
Beyond that, unlike the 2008 financial crisis when capital investment largely fell away, activity is still planned but paused.
How we can help your business
As with any period of rapid change and economic uncertainty, the ongoing situation has resulted in and will continue to offer significant opportunities as well as challenges for businesses and their owners and management teams.
We aim to establish a strong professional relationship and understanding with our clients from the outset with a view to working with them over the long-term to help their businesses to identify and capitalise on opportunities and grow, whilst protecting against the risks posed by the challenges.
Whether a business is looking to renegotiate and update key commercial contracts or to restructure its workforce, reassessing its property needs or faced with a dispute, our specialist lawyers have the expertise and experience to help.
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