Industry reaction on the news that GDP is falling faster than experts predicted

Following today’s news that recession fears grow as the UK economy shrinks 0.3% in April, Tommaso Aquilante, UK Lead Economist at Dun & Bradstreet said: “GDP has dropped for two months in a row for the first time since the pandemic struck in 2020. Although the drop was largely due to the ending of the Government’s Covid-19 test-and-trace programme, the news contributes to clouding businesses prospects at time when inflation and energy costs soar and national insurance increases. Add to that the abnormally high public debt-to-GDP ratio and the continuing effect of the Ukraine-Russia war on most of Europe, and it’s apparent that businesses and governments continue to be plagued by uncertainty. Even though the UK is less dependent on Russian energy commerce than other European countries, inflation continues to be higher than in many major European economies. On this front, Brexit might have acted as a shock amplifier through larger trade barriers (the Trade and Cooperation Agreement was no substitute for free trade or the EU agreement), reduced labour supply and greater uncertainty.

“With the crisis directly or indirectly impacting businesses all around the country, they must try to properly and efficiently analyse the danger of specific scenarios on the horizon. Businesses’ cash flow may suffer because of customers’ tighter budgets and higher costs. As country risk increases and the GBP/USD or GBP/EUR exchange rates react to central bank and government decisions, businesses, particularly those that trade globally or rely on suppliers that operate in foreign markets, will need to take action to protect themselves from financial risks. In fact, these can be better assessed if organisations have a complete view of their supply chain and those they do business with across all their operations.”