Commentary on the ONS monthly and quarterly GDP results

“News that the UK GDP contracted by 0.2% in December last year should come as no surprise given Omicron’s disruption to the UK’s economic recovery. Elevated inflation, a national insurance hike and rising energy bills are a reminder of just some of the challenges businesses will have to face. While Covid tails off, it continues to weigh on the economy: Dun & Bradstreet proprietary data shows that between January 2021 and November 2021, the number of business liquidations in the UK increased by 19% against the same 12-month period in 2020.

“That said, with four of the nine members of the Monetary Policy Committee who voted to raise interest rates to 0.75%, the Bank of England is committed to limit the erosion of purchasing power driven by price increases and also to bringing inflation back to target (2%). However, businesses, particularly those that trade internationally or use suppliers that operate in overseas markets, may need to take further action to protect themselves from potential financial risk caused by increases in the GBP/USD or GBP/Euro exchange rates. This includes having a comprehensive view of their suppliers, customers and prospects to identify cash flow risks while also capitalising on new growth opportunities.”

Tommaso Aquilante, UK Lead Economist at Dun & Bradstreet