Chamber calls for Government to step in now to support businesses with economy in reverse gear

Scott Knowles said that the 0.1% fall was yet another signal that the UK economy was moving in a direction he described as "alarming".

He said: “It reflects the fall in real-terms disposable income as rapid inflation deepens the cost of living crisis for consumers, as well as the capacity issues faced by firms amid global supply chain disruption and labour market shortages – which make it difficult to free themselves from a simultaneous cost of doing business crisis. 

“In the East Midlands, 40% of businesses told us they were operating at fully capacity during this same period – a record-high percentage for our Quarterly Economic Survey – while four in five businesses that attempted to recruit struggled to fill roles.

“To raise capacity, we need businesses to invest in order to increase capacity. But this remains a serious challenge – investment intentions among our region’s firms were down by 6% for plant and machinery between Q1 and Q2, and by 3% for training people.

“We have some fantastic businesses in our region that have proven themselves to be resilient during the toughest times they’ve ever known and we know they will come through this period. But with business confidence nosediving and likely to plummet further as energy costs continue to hike, it’s clear something must change soon. 

“Coming hot on the heels of the Bank of England’s forecast that we could be in for five consecutive quarters of economic decline, we need Government to step in and take action now rather than wait until a new Prime Minister is in place. 

“The Treasury can give firms some headroom in the short term by immediately cutting the VAT on their fuel bills to 5%, while the next Prime Minister should work with the business community to come with a policy for providing training-related tax breaks and reforming the shortage occupation list to allow sectors facing urgent demand for skills to get what they need.”