UK economy hit by double blow, maybe only entrepreneurs can save it

The economic news is out, and – well you need to make sure you are sitting down before you read on, it ain’t pretty, maybe we need entrepreneurs more than ever.

Let’s look at the least piece of bad news first.

This morning saw the latest purchasing managers index (PMIs) tracking UK services, this followed the release of PMIs for manufacturing and construction earlier in the week.

The manufacturing PMI fell to a three-month low. The Construction PMI fell from the month before, and optimism in the construction sector dropped to the lowest level so far this year.

To recap, that’s disappointing, and a bit more disappointing. So, what did the PMI tracking services say?

Alas, it was worse, falling to a nine-month low – although job creation was up, optimism fell to its second lowest level since 2011.

Chris Williamson, Chief Business Economist at HIS Markit, which compiles the survey said: “With business optimism having been hit by the intensification of political uncertainty following the general election and commencement of Brexit negotiations, at the same time that households are battling against rising inflation, the indications are that the economy’s resilience is being tested.”

Well, there’s an understatement for you.

Combined, the three PMIs were consistent with growth of around 0.4 per cent in Q2 – that is not disastrous, better than Q1’s 0.2 per cent growth which was verging on disastrous, but it was not very good, either.

Never mind, today also saw the release of the most important economic indicator of the lot – although not one that gets talked about much. We got the latest data on UK productivity – output per hour.

This is vital, because without growth in output per hour, the UK can only grow through either more people working, or people working longer hours. And since there is a limit to how many people can work, set by the size of the population, the rate of growth in productivity is vital.

And across the G7 we are second from bottom, only in Japan is output per hour worked, lower.

In Q1, output per hour contracted, yes contracted, by 0.5 per cent.

That is not disappointing, that really is disastrous.

The UK needs to solve the problem of productivity. It needs to see more money spent on digital and non-digital infrastructure, but above all it needs the three Es.

It needs entrepreneurs, entrepreneurs, and entrepreneurs.

The UK is emerging an entrepreneurial success story – but more needs to be done, and one way to achieve this is to shine the media spotlight on entrepreneurs, their challenges, their failures and of course their successes.

The NatWestGreat British Entrepreneur Awards are currently open for applications, and entrants can apply here