UK Economy Booms In May But Concerns Remain For The Months Ahead

Posted by Liz Seyi on July 2nd, 2021

As many businesses are likely to have sensed when handling their bookkeeping in Plymouth, Wellington or elsewhere in the country over the past few months, the spring has proved a time of resurgence for the UK economy. 

As reported by The Guardian and other outlets, May saw the services sector record its quickest month-by-month growth since 1997, accompanied by a drop in the number of furloughed workers. 

Positive growth statistics, accompanied by cost pressures 

Recent weeks and months have seen all four UK nations relax restrictions designed to slow down the spread of the coronavirus, and it appears that the impacts of this loosening – and the recovering COVID-19 situation across Europe – were borne out in May’s data. 

IHS Markit and the chartered Institute of Procurement and Supply (CIPS) provided a monthly snapshot indicating the biggest rise in UK business and consumer spending during May for almost a quarter-century. Furthermore, the rate of employment growth was reported to be at its strongest for just over six years. 

However, there was also evidence in the survey of costs rising at their steepest rate since July 2008, with the UK service sector – which includes the likes of hotels and restaurants – seeing ever-greater pressure on employee wage bills, transport and raw materials. The IHS Markit and CIPS report attributed this largely to “tighter labour market conditions and subsequent rises in salary payments”. 

Indeed, the newspaper referenced recently-expressed employer concerns that Brexit and the pandemic combined had contributed to staff shortages, with fewer workers from the European Union (EU) travelling to the UK in search of work. 

Nonetheless, the IHS Markit/CIPS purchasing managers’ index (PMI) went up from 61.0 in April to 62.9 in May. This is an important measure of activity in the services sector, with any reading above 50 indicating that the sector is growing. 

“There are still so many factors for investors to weigh”

A financial analyst quoted by The Guardian, Danni Hewson, pointed out that the picture looking forward remained far from certain, commenting: “There are still so many factors for investors to weigh, such as whether the economy will overheat or whether new COVID variants could prompt a further economic downturn.” 

The CIPS and IHS Markit report, however, stated that “strong inflationary pressures did little to dampen business expectations for the year ahead, with confidence drifting down only slightly since April. The index remained close to March’s 14-year high and signalled a strong degree of optimism about near-term business activity growth.” 

Reap the benefits of truly modernised bookkeeping in Plymouth or Wellington

While much uncertainty remains as to what service-sector businesses across Devon, Somerset and beyond can expect in the months to come, one thing that is infinitely surer is the importance of a bookkeeping approach fit for the 21st century. 

By that, we mean a solution for your bookkeeping in Plymouth, Wellington or nearby that is efficient, cost-effective and relatively unstressful, in part because it embraces the latest digital processes. To learn more about what all of this could mean for your business, please don’t wait any longer to enquire to the Britebooks team.

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Liz Seyi

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Liz Seyi
Joined: August 13th, 2019
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