IoD: GDP growth welcome sign of business resilience, but no reason for complacency

Responding to official preliminary GDP growth statistics for Q3, showing that the quarterly economic growth rate was 0.4%, Tej Parikh, Senior Economist at the Institute of Directors, said:

“Although it is just a first estimate, GDP growth rising to 0.4% between July and September should be welcomed as a sign of resilience in British businesses. The return to growth in manufacturing, which grew by 1.0%, is a positive development. The economy remains, of course, largely reliant on the contribution of the services sector, with strong performance in computer programming, and the motor and retail trades helping to drive growth over the quarter.

“We would like to see more broad-based growth, and are concerned, for example, that the construction sector is now in recession. This means there is no reason for complacency. It seems unlikely that the consumer-driven economy can sustain itself with inflation outpacing wage growth, and, as such, maintaining the low interest rate environment remains important.

“And, with businesses facing higher costs, skills shortages, and uncertain revenues, the Government must ramp up investment support for businesses in its forthcoming Budget – alongside providing much-needed clarity over the Brexit process, to help build on the underlying resilience in the economy.”

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