GDP growth reaction: Collections firms “fully expect” customers’ circumstances to change

The economy has still only recovered just over half of the lost output caused by coronavirus.

July GDP was 18.6% higher than its April 2020 low but still 11.7% below February’s total. While there was an increase during July, GDP actually fell by 7.6% in the three months leading up to it, following two consecutive quarterly falls.

ONS director of economic statistics Darren Morgan, said: “All areas of manufacturing, particularly distillers and car makers, saw improvements. Car sales exceeded pre-crisis levels for the first time with showrooms having a particularly busy time.”

Head of economics at the British Chambers of Commerce, Suren Thiru, said: “The UK economy is currently in a period of temporary calm, with activity buoyed by the government’s emergency support measures and the unwinding of pent-up customer demand as more parts of the economy reopened.

“However, with many firms continuing to face an unprecedented cash crisis and unemployment likely to surge as the support schemes wind down, there remains little prospect of a sustained resurgence unless substantial action is taken.

“To protect jobs and livelihoods, the government should consider extending and adapting the Coronavirus Business Interruption Loan Scheme to ensure businesses are supported sustainably over a longer period, as well as introducing a more significant package of support for firms placed under local restrictions.”

Chris Leslie, chief executive of the Credit Services Association, said: “It is always encouraging to hear that the UK economy is improving, especially in these difficult times, and has climbed back to the level of output we had in 2013. But there are many challenges ahead, not least being able to make up the equivalent of the past seven years of growth.

“Our members are fully expecting customers’ circumstances to change over the next few months as the furlough scheme and other government support packages come to an end and are well placed to support them."

Confederation of British Industry chief economist, Rain Newton-Smith, said: “As more businesses were able to open their doors, the economy grew further in July. But economic growth lost some steam on the previous month, illustrating the continued uncertainty over the shape of an economic recovery ahead.

“A successor to the Job Retention Scheme and a deal with the EU are essential foundations for a near-term economic recovery.”