BHETA members attending The British Home Enhancement Trade Association’s webinar with Glynn Jones, Deputy Agent at the Bank of England and Richard Butler, Regional Director at the CBI heard ultimately positive forecasts from both speakers for 2021 and beyond. There were however several caveats and pleas for action from Government for measures to help the economy grow.
Glynn Jones acknowledged the considerable uncertainty of the present; but expressed a degree of confidence that the economy will bounce back though the summer with GDP picking up strongly during 2021 from a predicted low of 12% below its Q4-19 level in Q1-21. Assuming the Government’s four step plan proceeds as outlined, then consumer spending should pick up materially as the UK emerges from lockdown, while business investment will also pick up but more slowly.
The consumer outlook is fuelled by a strong potential positive of households having accumulated savings of around £120 billion since March 2020, but key to the recovery will be how much of this is spent. Most of the money is held by high income and retired households who have less propensity to spend. With unemployment projected to peak at 7.75% in the mid-year, to what degree this will dampen spending remains a significant question.
Business shows a mixed picture with pay and energy prices rising, but pay settlements expected to ease in 2021. Inflation is currently subdued and projected to remain low in the short term but expected to rise sharply over H1. BREXIT adjustments offering positive opportunities, but equally some serious challenges to trade.
Richard Butler elaborated on this point, saying that while the new UK-EU TCA benefits include zero tariffs and zero quotas for qualifying goods, annexes to reduce technical barriers to trade, continued access to some EU programmes, a grace period on agri-food and medicines and a four to six month grace period on data, business was currently experiencing many serious difficulties. These included increased customs and border checks, rules of origin compliance, the border with Northern Ireland, low market access for services, and no automatic MRPQ equivalence.
Richard also referred to the UK’s new multi-speed economy, with some sectors flying and others closed or virtually so. He urged the Government to ‘resume the day job’ of economic growth, following the pre-occupying twin issues of BREXIT and the pandemic.
Will Jones, Chief Operating Officer at BHETA commented, “This was an immensely helpful session on the positive potential for recovery, interwoven
with the steps that need to be taken to secure it. Both Glynn and Richard explored the subject thoroughly and clearly.”
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