Published on: 07 October 2021
Confederation of British Industry (CBI) Economics has released its quarterly guide (Economic Deep Dive, Quarter 3 (Q3) for July - September) to the UK economy; making sense of the key trends and what’s driving them. This Economic Deep Dive is for CEOs, financial directors, and business leaders.
The quarterly highlights that the guide shows are:
- UK gross domestic product (GDP) rebounds in Q2 as the economy re-opens – UK GDP grew by 4.8 percent quarter-over-quarter (q/q) in Q2 (after falling by -1.6 percent in Q1). This left the economy 4.4 percent smaller than it was pre-covid (2019 Q4).
- Pace of recovery is likely to have peaked – however, GDP figures for July disappointed expectations, with the economy growing by just 0.1 percent over the month. Nonetheless, anecdotes and survey data point to underlying demand remaining strong. Recent forecasts point to Q3 GDP coming in around 2.2 percent for the quarter as a whole which, despite marking slower growth than Q2, remains strong by historical standards.
- Recovery impact by labour and supply shortages – CBI survey data points to stock adequacy in the distribution and manufacturing sector reaching record lows in recent months, with global supply chain disruption the likely cause. Member intelligence also suggests that many firms are dealing with labour shortages.
The CBI expects UK GDP to grow by 8.2 percent year-over-year (y/y) in 2021, following a drop of -9.8 percent in 2020.
The quarterly guide looks at seven different sections, which are:
- UK GDP growth disappoints in July
- Private sector activity growth hits six-year high
- Supply challenges drive stock positions to record lows
- Labour market strengthens further
- Bank of England lays the groundwork for unwinding monetary stimulus
- International Monetary Fund (IMF) warns of divergent global recovery
- How are businesses reacting to changes in the UK economy?
You can find the link to the Economic Deep Dive Quarterly guide from CBI, on the British Marine website here.