Region’s ‘world-leading’ business sectors tough out economic slump
- Credit: The Forge Kitchen
Some parts of the East of England’s economy have performed well during the economic crisis unleashed by the coronavirus crisis, financial experts say.
But the success of sectors such as healthcare, life sciences and technology do not outweigh the damage caused to key regional industries such as hospitality, retail and leisure warns accountancy giant EY (Ernst & Young).
The UK economy could avoid a double-dip recession after a “resilient” performance in November, according to an upbeat EY ITEM Club’s Winter Forecast, published on January 28. Despite tighter Covid-19 restrictions, figures suggest that GDP didn’t contract in the last quarter of 2020, it said.
The absence of a contraction in the last quarter of 2020 means the UK may narrowly avoid its first double-dip recession since the 1970s.
The forecast predicts a 3% to 4% contraction in UK gross domestic product (GDP) in the first quarter of 2021, but an improvement after that as the economy is lifted by vaccine roll-out and a Free Trade Agreement in place with the European Union.
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It believes that after the better-than-expected UK economic performance in 2020 — when GDP shrank by 10.1% — the country will return to growth in 2021 with GDP rising by 5% and 6.5% in 2022 before flattening to 2% in 2023 and 1.8% in 2024.
EY ITEM Club chief economic adviser Howard Archer said the UK economy had shown “remarkable resilience”.
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Stuart Wilkinson, office managing partner at EY in the East of England, said: “There are pockets of positivity and opportunities for growth within certain sectors in the region, and more general positivity beyond the second quarter.
“Businesses operating in the healthcare and life sciences and technology sectors — sectors in which the East of England is world leading – have proven to be particularly resilient in dealing with the challenges of Brexit and the Covid-19 pandemic.”
But he added: “While the opportunities for businesses in some sectors — notably job creation and the potential for strategic investment and growth — do not completely outweigh the challenges facing others, such as those in the vitally important hospitality, retail and leisure sectors, they do offer glimpses of how the economy is evolving and, for the East of England in particular, where future investment activity may be focused.
“Businesses need to be prepared. Now is the time to firm up post-pandemic plans as the shape of the future economy becomes clearer.”