Thames Valley: Reasons for cautious economic optimism

Sometimes it can feel as if there is little to come in the way of good news during the past year, but two items shared this week may provide businesses based in and around the Thames Valley with a welcome boost. Leading Thames Valley law firm Blandy & Blandy’s joint managing partner, Tim Clark, explains.

The Bank of England’s Monetary Policy Report

As the Bank of England voted to hold interest rates at 0.1%, it predicted that economic growth will "recover rapidly" in 2021, thanks to increasing consumer confidence and spending as a result of the (so far) successful vaccination programme.

The bank’s Monetary Policy Report for February suggests that GDP increased in the final quarter of last year, to a level around 8% below that of 12 months earlier. It described the outcome as “materially stronger than expected” in its November report.

In the current first quarter, the bank predicts a fall in GDP of 4%, forecasting that the impact will not be as severe as that seen during the first national lockdown last spring.

The report suggested that whilst an immediate rise in unemployment may not be on the horizon, with the “furlough scheme” set to run until April 30, it does still predict a rise to 7.8% (from the current level of 5%). To provide some context, following the “financial crisis” in 2019, unemployment rose from the same level of 5% to a peak of 10% in October that year.

Despite the more positive news, the report did caution that “the outlook for the economy remains unusually uncertain. It depends on the evolution of the pandemic, measures taken to protect public health, and how households, businesses and financial markets respond to these developments.”

The Good Growth for Cities Index

PWC/Demos’ newly published Good Growth for Cities 2020 report ranks Reading second only to nearby Oxford in a list of UK cities best placed to withstand the economic shock resulting from the pandemic, and to stage a strong recovery.

The index is based on Reading’s sustained success in recent years when it comes to job and business creation, income levels, quality of life, health and having a skilled workforce.

It says that Reading has been comparatively less affected than many areas of the UK, ranking it 10th in the country.

Employment data shows that less than one in 10 eligible workers have been placed on furlough leave by their employer during the pandemic, whilst job vacancy rates in certain key sectors remain strong.

And, unlike during the financial crisis, when capital investment largely fell away, activity is still planned but paused.

How Blandy & Blandy can help your business

Like any period of rapid change and economic uncertainty, the ongoing situation has resulted in valuable opportunities as well as significant challenges for businesses, their owners and management teams.

Blandy & Blandy aim to develop a strong professional relationship with clients, to work with them over the long-term, helping their businesses to capitalise on these opportunities and to grow, whilst identifying and protecting against risk.

Whether a business is looking to renegotiate and update key commercial contracts or to restructure its workforce, reassessing its property needs or faced with a dispute, specialist lawyers have the expertise and experience to help.

For further information or legal advice, please visit www.blandy.co.uk.