Economy recovering stronger than expected 

Data released by the ONS this month sows Britain’s economic recovery during the 2nd half of 2020 was stronger than first anticipated, with recently revised figures showing the economy expanded by 16.9% in Q3 of last year and 1.3% in Q4. This equates to an increase on previous estimates of 16.1% and 1%. It should be noted however the revised figures also highlight that GDP reduced by more than had been initially estimated in Q2, showing a decline of 19.5% between April and June in contrast with the 19% previously predicted.

The ONS also stated that GDP declined by 9.8% in 2020, reflecting a slight change to the 9.9% originally projected. According to the Bank of England, this was the largest contraction since 1709. The report also showed that whilst disposable incomes rose by 0.1% last year. the saving rate increased by 1.8% to 16.1% in Q4 of 2020.

£450m of Furlough Funding repaid by firms 

Latest analysis shows that businesses have repaid nearly £450m of taxpayer money claimed for staff wages during the Covid 19 Pandemic. Data recently released by the HMRC showed that as of 18th February 2021, 13,126 firms had returned a total of $446.6m claimed via the Governments furlough scheme. To date, the emergency funding schemes rolled out by the Government have paid out £58bn.

Mid-Market firms spearheading the economic recovery drive

A report published by BDO has predicted the economy is set for a substantial boost as a result of investment and recruitment by mid-sized businesses. The data shows that firms with a turnover between £10 – £30m will accelerate the post Covid-19 economic recovery. Polling leaders from 500 medium sized businesses, the report found that 75% stated 2021 is ‘the time to invest’. The same amount of business leaders also expected revenues to return to their pre-pandemic levels within 12 months of restrictions being lifted. Furthermore, 86% had plans to recruit more staff within the next 6 months and 54% of those were planning permanent appointments. Interestingly, almost 50% of those polled were planning investment as a result of the “super deduction” initiative, a scheme announced in the budget which allows businesses to reduce their tax bill by up to 25p for every £1 invested.

UK predicted to outperform Europe and the US in 2022

According to a report from the IMF (International Monetary Fund) this month, Economic Growth in the UK is expected to outperform both that of Europe and The US in 2022 due to the successful vaccine rollout and the treasury’s extensive spending programmes. UK growth of 5.3% was expected in 2021 and 5.1% in 2022, having been hit one of the hardest by the Covid 19 Pandemic. Growth globally is predicted to bounce back to 6% in 2021, followed by a 4.4% GDP rise in 2022 thereafter. This is after a contraction of some 3% in 2020. By contrast, the EU zone will still see growth of 4.4% in 2021 despite their relatively slower vaccine rollout. It is worth noting here however the IMF also warned of ‘multispeed’ recoveries with much of the developing world falling behind and increasing financial risks from high levels of business borrowing and booming markets.

Investment in start-ups increases 

A record £5.1bn was invested in British start-ups in Q1 of 2021, according to research from KPMG. Fast growth businesses attracted 25% more capital in Q1 of this year than Q4 of 2020, and perhaps surprisingly, almost doubled that seen in Q1 2020. Almost a third of the funds raised by businesses around Europe in Q1 of this year went to UK based firms. The report goes on to state that Britain attracted the “lion’s share of large deals”, accounting for seven of the top ten biggest funding rounds. While the total amount invested in the UK by venture capitalists was up by a quarter at £5.1bn, the number of deals slipped 23% on Q4 2020.

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*Sources: City AM,, NACFB, IMF, KPMG

Published On: April 30th, 2021 / Categories: Business, finance /