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August 12, 2021

UK GDP in Q2 2021: a step in the right direction?

By Patrick Brusnahan

Expert eyes will be paying attention to the UK and its GDP in Q2 2021 following a rough 2020 and the emergence of the Delta variant. Is the country going to remain recovering steadily or will the UK find hiccups? A lot will be found through the GDP of the UK in Q2 2021. Patrick Brusnahan asks the experts

Caroline Simmons, UK Chief Investment Officer, UBS Global Wealth Management

The UK second quarter GDP printed in line with expectations, reminding us that the economic recovery remains on track despite any fears over supply or labour shortages or the Delta variant.

A few more solid growth prints, and the correction of some technical factors in the US treasury market, should allow bond yields to drift higher into the year end. This would continue to support our Value preference within UK equities.

Ian Warwick, managing partner, Deepbridge Capital

Although expected with the economy reopening, today’s GDP data is the latest sign of positive growth for the economy. As we continue to focus on economic recovery, it remains critically important that scale-up businesses, particularly in high-growth sectors such as digital technologies and life sciences are supported; as they will be at the very heart of economic growth as we create an economy fit for the twenty-first century. Government initiatives such as the Enterprise Investment Scheme (EIS) have never been more important for helping entrepreneurs and innovators source the funding they require, whilst also offering private investors with tax incentives to develop UK-supporting private equity portfolios. With our EIS funds reaching record levels of funding in 2020/21 it is evident that there is considerable demand from investors and financial advisers alike to invest in early-stage UK companies which we believe will be at the forefront of our economic recovery.

Jenni Letheren, owner, JLL Accountancy & Admin

Business definitely got better for us during the second quarter and also July. As a start-up ourselves, we are seeing an influx of newly formed limited companies which are unaware of their responsibilities in relation to accounts and taxes. I am confident in our business over the next 12 months, but worry about people who went limited and will miss statutory deadlines.

Douglas Grant, director, Conister

Today’s UK GDP data shows a positive uptick quarter on quarter and provides a more encouraging outlook for the UK economy going forward. However, the plight of UK small businesses and current default levels caused by the ongoing impact of the pandemic should be of real concern. We must acknowledge that the UK’s business debt burden has ballooned to unprecedented levels and unfortunately this has already created a relentless flow of weak zombie-like companies falling off a loan default cliff. It is imperative that we support sectors and businesses that are strong and nimble enough to adapt to the new economy and therefore continue contributing to its growth.

We also believe that the introduction of the Recovery Loan Scheme will act as second support system for those businesses currently struggling but with long term growth potential . Indeed, we have been pleased to see the Government look beyond the obviously more resilient business sectors and introduce the RLS which can support those businesses that have been mostly negatively impacted by Covid-19, such as the hospitality and leisure sectors. Conister will continue to do all it can, working alongside the Government and traditional lenders, to support businesses.

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