Responding to the latest official GDP figures showing the economy grew by 1% in Q4, and shrunk by a record 9.9% over 2020, Tej Parikh, Chief Economist at the Institute of Directors, said:
"The record drop in economic activity over 2020 underscores the challenging road ahead.
"The return of restrictions late last year slowed the economic recovery that had been gathering pace over the summer. While the vaccine rollout now offers light at the end of the tunnel, businesses will first need to weather a challenging winter period with the latest lockdown piling upon on last year's cashflow difficulties. Adjusting to new trading terms with the EU will also enact a further cost on many organisations.
"With tech adoption and adjustments to remote working, some businesses have become more resilient to restrictions over time. However, with rising debt burdens and continued weakness in demand, many firms will still need government support to get through the challenging months ahead.
"An extension to existing coronavirus economic support, particularly the furlough scheme, will provide a vital cushion for businesses while the economy remains fragile. The government should also provide forward guidance on its strategy for reopening the economy, to help firms with their planning in the here and now.
"The upcoming Budget will be a crucial factor in determining just how strongly the economy can bounce back. Entrepreneurs and small firms will be the driving force of the recovery, so it is essential that the Chancellor does not lumber them with higher taxes and instead uses the Budget to spur business investment.
The full IoD Budget submission can be seen here.