GDP irrelevant measure to UK SMEs says survey
As the official measure of the UK’s economic performance suggests a return to pre-recession levels, research reveals that the majority of SMEs believe GDP is irrelevant.
The UK GDP – the official measure by which economists, analysts, financial institutions and the Government assess the health of a country’s economy – grew 0.8% in the last quarter, 0.2% ahead of its pre-financial crisis peak.
But a survey of 1,000 SMEs by business funding provider, Bibby Financial Services, has found that only one third (34 per cent) would describe it as a relevant measure of the health of the economy.
Edward Winterton, commercial director at Bibby Financial Services, said: “It’s interesting that while the quarterly GDP announcements are eagerly anticipated by the government, economists and bigger businesses, small businesses – the engine room of our economy – don’t feel it is an accurate reflection of the business environment in their local areas.
“For many of our business customers, an indicator of activity in their region or sector is more relevant than the broad, macro-economic view. GDP undoubtedly has its place as an indicator but this research suggests that businesses in the UK would value analysis on a more local level.”
The Office for National Statistics publishes Gross Value Added data (GVA) which measures regional output – but its widespread use as an indicator is relatively limited. GVA figures are published annually rather than quarterly and statistics relate to the year previous.
“For businesses, understanding regional economic performance is likely to be more useful in a practical sense. Using a regional measure – like GVA – alongside GDP on a quarterly basis would offer a more holistic, macro and micro-economic view, which would reflect local business environments more accurately,” Winterton added.
