There was, unsurprisingly, further bad news for ‘UK plc’ in the latest Government figures, with the Office for National Statistics (ONS) revealing that the economy declined by a larger than anticipated 0.3% during April 2022.
That 0.3% contraction came behind a 0.1% shrinkage the previous month. A concern for many observers was that April marked the first time since January 2021 that all three of the UK economy’s main sectors – services, manufacturing, and production – shrunk.
And the factors behind such falls are well-established by now. Recent data points to continued high prices and supply-chain headaches making life difficult for firms across the UK. At the same time, a leading business group also drew attention to the toll being exacted by tax increases.
The British Chambers of Commerce (BCC), the business group in question, recently said that consumers and businesses would be highly penalised financially by Russia’s war against Ukraine and continued delays to supplies from China, as it downgraded its 2023 growth outlook to 0.6%.
What else do we have to learn from the latest economic data?
As reported by the BBC and elsewhere, the ONS said that the decline in the services sector principally drove the decrease in the size of the economy in April due to the NHS’s COVID-19 test-and-trace operation being wound down.
The ONS’s economic statistics director, Darren Morgan, added that manufacturing had also “suffered” during the month, as increasing fuel and energy prices impacted some firms.
Car sales did go up in April, though, the situation thankfully improving on a “significantly weaker than usual March”, which saw the release of new registrations.
On such a gloomy backdrop, it can surely be no great shock that business optimism has now sunk to its lowest level for more than a year.
The Evening Standard said that the optimism index of one accountancy firm had fallen by 4.82 points to 101.93, which was the second month in a row of decline. The services optimism index, meanwhile, dropped 5.35 points to 100.95.
The London newspaper referred to a survey of 500 company heads, which found that more than a quarter of mid-sized businesses stated they had been forced to put up prices as a consequence of inflation. 19% of respondents said they had halted all business investments.
Nearly a fifth (18%) of participants in the research said that escalating inflation and the cost-of-living crisis were set to have a more detrimental impact than COVID-19.
In trying times, our accounting and tax specialists will be there to assist you
In a few words, current economic conditions remain extremely challenging. Indeed, the Organisation for Economic Co-operation and Development (OECD) has forecast that the UK will face an even rockier time in 2023.
That’s all the more reason to ensure you and your company are as well-equipped and adequately supported as possible for all the key business difficulties and opportunities ahead.
TS Partners is ready and available whether you are looking for the best Corporation Tax support in Plymouth, help with VAT assessment in Newton Abbot, or comprehensive tax compliance services for your Wellington business.
Get in touch with us today at our Devon or Somerset offices to learn more about how we can help make your life as a business owner slightly less stressful.
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