- Autumn statement to be a “pivotal moment”, says KPMG
- Government needs to “fire the starting gun” on growth
Commenting on today’s revised GDP figures, KPMG’s Chief Economist Andrew Smith said: “Any upward revision has to count as good news, but the latest estimate of Q2 GDP (from a shrinkage of 0.7 percent to a reduction of 0.5 percent) does little to alter the big picture. The challenges are considerable: in this, the slowest recovery on record, output has shrunk in each of the last three quarters. Recent data may have been distorted by extreme weather, the Jubilee and additional bank holiday, but even as these special factors unwind any bounce-back looks set to be constrained by continuing weak demand.
“The small upward revision to GDP leaves the labour market conundrum – the resilience of employment in the face of falling output – intact. But the employment data are not as robust as they look. To some extent full-time jobs have been replaced by part-time positions and the patience of companies which are hoarding labour in the expectation of an upturn is unlikely to be infinite.
“The Bank of England will probably do its bit in November and announce more Quantitative Easing – but additional pro-growth measures including a more expansionary fiscal policy would be welcomed.
Commenting on the wider business outlook, KPMG chairman and Senior Partner, Simon Collins, added: “The issue for many larger businesses is not so much shortage of capital (as many have substantial reserves) but is rather a lack of confidence around going ahead with longstanding and well developed growth and expansion plans. By contrast, the funding for lending scheme is a good start and will hopefully enable struggling small businesses to access the capital they need to thrive.
“Concerns over the ultimate fate of the Eurozone, home to many of our key export markets, remain a massive area of uncertainty for business. While the UK government plays its part, options for influencing it are limited.
“Whether through lack of confidence or uncertainty about the wider economic outlook, this epidemic of inertia is holding back UKplc and what it needs is a signal to go ahead. As senior decision makers return to their desks after the summer, they will be looking to government to fire the starting gun on a programme for growth with concrete measures and commitments. The autumn statement is likely to be a pivotal moment.”
For further information please contact:
Margot Cowhig, KPMG Corporate Communications
Tel: 0207 694 4246 Mobile: 07920 274856: firstname.lastname@example.org
KPMG Press Office: 0207 694 8773
Notes to editors.
KPMG LLP, a UK limited liability partnership, is a subsidiary of KPMG Europe LLP and operates from 22 offices across the UK with over 11,000 partners and staff. The UK firm recorded a turnover of £1.7 billion in the year ended September 2011. KPMG is a global network of professional firms providing Audit, Tax, and Advisory services. We operate in 152 countries and have 145,000 professionals working in member firms around the world. The independent member firms of the KPMG network are affiliated with KPMG International Cooperative ("KPMG International"), a Swiss entity. KPMG International provides no client services.