Responding to latest official figures, showing GDP fell by 20.4% in the second quarter of 2020, Tej Parikh, Chief Economist at the Institute of Directors, said:

“These dire figures highlight the painful reality households and businesses across the country are facing. The battle now is to prevent longer-term scarring from this coronavirus-induced plunge in economic activity.

“Job losses have been mounting, and may only increase as we reach the end of the furlough scheme. The pile of debt businesses have had to take on could also cause a lasting hangover. With flimsy balance sheets, directors will find it difficult to push ahead with any spending plans. Meanwhile, sales and operations will remain limited by the need for social distancing and ongoing uncertainty around the virus.

“The Chancellor must respond now with measures to support jobs by cutting the cost of employment, for instance by reducing employers’ National Insurance Contributions. By the Autumn, it might be too late to have greatest effect. The Treasury should also explore options for restructuring business loans, while a targeted grant to help SMEs adjust to the new normal would bolster the Government’s aim of reopening the economy.”