The UK economy shrank again in January as the third Covid-19 lockdown took hold. This followed the growth of 1.2% that the ONS reported for December 2020.

GDP also contracted by 1.7% in the three months to January, which the ONS revealed was down from a 1.0% growth in the three months to December.

The output approach to GDP shows that January’s level was 9.0% below that seen in February 2020 and was 4.0% below levels seen in October 2020, the initial recovery peak. Overall, all main sectors of GDP remained notably below their pre-pandemic levels that were reported in February 2020, and all were lower than in October 2020.

Douglas Grant, Director of Conister, “While a drop in output is usually a sign of a struggling economy, we are, by this point, all too aware of the effect national lockdowns have on output and production. Businesses will still be encouraged by the continued support on offer from the UK Government and the Chancellor’s introduction of a new loans scheme offering £25,000 to £10 million loans for businesses of any size, in the latest Budget earlier this month. The economy has been like a coiled spring as lenders flush with liquidity in a low-yield environment prepare for the potential of negative interest rates and look to deploy capital to support resilient business sectors. Lenders and agile, resilient companies alike have been awaiting a directive on which sectors remain a Government priority and the introduction of a new ‘restart grant’ recovery loan scheme will provide the necessary catalyst many sectors need to living off an ever-increasing debt pile. The BBLS and CBILS played instrumental roles in keeping many resilient SMEs alive and acted as important triage systems to identify and support viable businesses that needed credit, and we are pleased to see the Government look beyond this triage phase and instead identify, prioritise and protect our most resilient individual business sectors and segments.

At Conister we have delivered upon all of our initial objectives. We had an allocation limit of £20 million for the CBILS and BBLS schemes and so far we have lent £19.7million, and I expect we will fulfil our allocation this month. Without doubt, the scale of applications was enormous and so we applied for and received an additional allocation of £5 million for the CBILS scheme and we will focus lending this to robust business sectors that we believe will thrive in the future. Conister will continue to do all it can, working alongside Government and traditional lenders, to support British businesses.”