Q3 UK GDP growth unrevised with business investment supporting growth in the quarter
OBR downgrades its economic and fiscal outlook for the UK
UK job market strengthens
UK growth was unrevised in Q3 at 0.5%. Despite the slow down, growth in Q3 marked the fifteenth successive quarter of growth. In annual terms GDP was up by 2.3% in A3. UK economic output is currently 8.1% above its Q1 pre-recession peak. Overall the latest GDP figures confirm that the UK economy is growth in line with the long-term historic average.
The Office for Budget Responsibility (OBR) has predicted slower growth for the UK in 2017. It has downgraded its forecast from 2.2% to 1.7%. The OBR expects 2.0% growth in 2016.
In the 3 months to September, UK employment rose by 49,000 compared with the previous quarter. The number of people unemployed fell by 37,000 over the same period. In Norfolk the recent October figure showed a slight rise in unemployment claimants from 6540 in September to 6830 in October. This is an average rise in claimants across Norfolk of 1.3%. Some of this rise can be attributed to seasonal work coming to an end.
Andrew Thomson, Chair Elect of East Coast College Governors, Rob Evans, Chair Great Yarmouth College and Tina Ellis, Chair Lowestoft College are asking for feedback on the proposed merger between Great Yarmouth and Lowestoft Colleges. They have jointly issued the below open letter: Dear Stakeholders We are excited to announce that the proposed merger of Lowestoft and Great Yarmouth Colleges is progressing well. Following the public consultation conducted in January and February 2016 the Corporation’s Governing Body were able to decide to proceed with the legal steps required to dissolve. We are now delighted to announce that the Corporation of Great Yarmouth College of Suffolk Road, Great Yarmouth, Norfolk, NR31 0ED is conducting its statutory consultation in accordance with the Further and Higher Education Act 1992, on the proposal to dissolve the College as a legal entity and to merge together with Lowestoft College. Thereby forming a new, two campus institution that will operate under the name ‘East Coast College’ (subject to consultation and Department of Education consent to the proposed name change). Please see the attached consultation document. Why is the dissolution proposed? Between January and July 2015 Great Yarmouth College and Lowestoft College and (along with three other colleges) were voluntary participants in a pioneering Area Review, the first of its kind in England.
Led by the Further Education Commissioner, Dr David Collins and Peter Mucklow, the Sixth Form College Commissioner, and involving representatives of national funding agencies and the Department of Business, Innovation and Skills, this initiative made a comprehensive review of post 16 provision in North and East Norfolk, and North Suffolk.
One of the review’s expert conclusions was that, ‘a soft collaboration will not deliver the level of change and savings needed and that full partnership (either hard federation or merger) between the colleges is the only route to achieving the critical mass of students and economies of scale required to make costs savings and to build and sustain excellent provision so as to ensure improvement of the offer to students and employers on employability and skills’. The Corporations believes that there are some, key benefits which will result from the merger as follows:
together, combining the complementary strengths of the two organisations, we can offer a wider, richer range of academic, technical and professional opportunities to 16-18 school leavers, adults, higher education students and the business community;
the merged colleges will be able to enhance the training, bespoke courses and apprenticeships offered to employers, and build a stronger partnership with industry;
the merged colleges can create an organisation with a combined annual turnover of around £25 million, which will enable further investment in learner resources and facilities, and ensure the continuity of good local provision; and
the merged colleges will be able to develop an organisation with a greater capacity to engage regionally, nationally and internationally with partners, bringing greater benefits to all the colleges’ students and local communities
Date of the proposed dissolution The planned dissolution date is 31st March 2017. (Subject to consultation and legal requirements.) Name Change On that same day it is planned that the two colleges will merge and that the name of the college will change to ‘East Coast College’ (subject to consultation and Department of Education consent to the proposed name change). New Board We will also be establishing a new East Coast College Corporation and will be looking for new Governors to join us. If you wish to receive further information on this please contact Wendy Stanger, details below. Further Details Please see https://www.lowestoft.ac.uk/east-coast-collegeProviding your views We are appealing to you personally, as a key stakeholder, to submit your views on the proposed dissolution and name change proposals by 9th January 2017. Please submit your feedback in writing to ‘Public Consultation, Attn. Wendy Stanger Head of Governance, Great Yarmouth College Suffolk Road Great Yarmouth Norfolk NR31 0ED’ via email to eccconsultation@gyc.ac.ukOr via our brief survey at https://www.surveymonkey.co.uk/r/8QGKK2BWhat happens next? Great Yarmouth College Corporation is legally required to take account of views and representations made under this consultation. The Corporation Governing Body will consider all responses before they make any final decision to dissolve and merge. A summary of the consultation and outcomes will be published by the Corporation by 9th February 2017. Yours sincerely Andrew Thomson CHAIR ELECT OF EAST COAST COLLEGE GOVERNORS Rob Evans Chair Great Yarmouth College Tina Ellis Chair Lowestoft College
The Norfolk Chamber are sponsors of the EDP Business awards ‘Small Business’ section.
Caroline Williams, CEO, Norfolk Chamber of Commerce said:
As the final deadline for entriesapproaches, I would encourage allsmall businesses to take time out toenter the Small Business of the YearAward. “Winning this award will demonstrateto a wider audience what youalready know – that you are a greatcompany. It is also a great staff motivatorto collate all your good points aspart of the process and even betterwhen you win.” Click on image to view full article
Since July 2014, the EU and 16 other members of the World Trade Organization (WTO) have been negotiating on an agreement to remove barriers to trade in green goods that are crucial for environmental protection and climate change mitigation.
These would include products such as carbon dioxide scrubbers, recycling machinery, heat pumps, thermostats and wind turbines.
The negotiators are building on a list of 54 products on which the member countries of Asia-Pacific Economic Cooperation (APEC) have agreed to reduce their tariffs to 5% or less.
Speaking ahead of the meeting, the Commissioner said: “Making trade in environmentally friendly technologies cheaper is a key step on the way towards reaching the targets set in the Paris agreement on climate.”
However, a joint statement with the US Trade Representative, released after the Geneva meeting indicated that agreement has still not been reached.
While recognising that many participants engaged constructively, and brought new contributions to the table, the statement concludes that “participants will now return to capitals to consider next steps”.
Commissioner Malmström and Ambassador Froman said: “We believe a high standard EGA would enhance global access to clean technologies; advance environmental protection; and benefit workers, businesses, and consumers.”
The BCC and TUC have put together a joint letter to the Prime Minister urging her to end uncertainty around the status of existing EU nationals, and give current EU employees a right to remain after Brexit.
It seems a long time since George Osborne spoke of “a Britain carried aloft by the march of the makers” (it was in fact his 2011 Budget) and the latest official report suggests that the sector is still lagging behind rather than carrying the economy forward.
Figures from the Office for National Statistics (ONS) show that manufacturing fell by 0.9% and production fell by 1.3% between September and October this year.
This was described by Lee Hopley, Chief Economist at EEF, the manufacturers’ organisation, as a fairly hefty contraction and she said that it was certainly not the start to the fourth quarter that the industry expected to see.
“Output falls appear fairly widespread across subsectors,” she explained, “but falls in pharmaceuticals, textiles and food were responsible for much of the drop over the month.”
TUC General Secretary Frances O’Grady was also disappointed by the latest figures which were, she suggested, a reminder of the challenges ahead next year, especially in the light of Brexit.
“When the manufacturing sector grows, it creates good jobs across the whole of the UK. So support for the sector should be a bigger priority for the government as part of a more comprehensive industrial strategy in 2017,” she went on.
The current Chancellor had said the right things about higher investment in the Autumn Statement, Ms O’Grady argued, but failed to back his words with a sufficiently robust investment package.
On a more positive note, Ms Hopley highlighted underlying resilience in the domestic market and a brightening outlook overseas as reasons for optimism.
A huge congratulations to our Chief Executive, Caroline Williams for being awarded a MBE in the Queen’s New Year’s Honours List for services to the Norfolk business community.
The chief executive of Norfolk’s chamber of commerce for almost 17 years has been made a Member of the British Empire. Mother-of-two Caroline Williams, who lives in Salhouse, said she was “thrilled and humbled” to receive the accolade. The 64-year-old joined the chamber in 2000, having previously worked as an international buyer and an account manager in Dereham.
At that time, she said the organisation had been “limping along” and was in a poor state financially. But over the following years, Mrs Williams, assisted by fellow members, transformed the chamber into a strong and sustainable position.
“I think one of the biggest achievements is that Norfolk’s business community is now visible in Westminster,” she said. “It understands that it can make a difference, and the chamber has worked as a good facilitator between the Government and the business community.”
The title is a among a string of accolades Mrs William has picked up this year. As well as becoming a qualified yoga teacher, she also received the EDP Outstanding Business Award. She will be stepping down from her role in April to focus on training business leaders across the county.
Read more about Norfolk Heroes recognised in the EDP here
The British Chambers of Commerce (BCC) today (Thursday) publishes its Quarterly Economic Survey – the UK’s largest and most authoritative private sector business survey. Based on 7,250 responses from companies in Q4 2016, the results show the uptick in Q3 in the manufacturing sector has been sustained in the final quarter, and more service sector firms were expecting growth than they were just after the EU referendum.
Overall, the findings suggest growth in Norfolk will continue in 2017, albeit at a more modest pace.
The survey results show that having slowed in Q3 2016, growth in Norfolk’s domestic sales and orders rose considerably in the service sector for Q4, although they have not bounced back to the levels last seen in 2013. The fall in Sterling looks like it is benefitting some manufacturers, with export sales and orders continuing the rise started in the last quarter. Manufacturing exporters started 2016 in negative territory, with export order balances at -8% but they finish 2016 in a very positive position, with an export order balance at +22%.
The survey also indicates that manufacturer’s confidence in future turnover and profitability has continued to increase throughout the year. Balances for hiring expectations and investment in plant and machinery also rose this quarter, again highlighting growing confidence for Norfolk’s manufacturing firms.
Norfolk’s service sector have not been as confident through 2016. They started the year with a negative balance for export sales (-3% in Q1) and the negative balances lingered throughout the year, dropping further to -12% in Q3, but finished stronger in Q4 with a positive balance at +11%. Turnover and profitability for the Norfolk Service sector also finished positively with turnover at +35% and profitability at +20%. Both of these balances are at lower levels that they were in Q1 2016 (+55% and +41% respectively).
However, the survey found that firms in both sectors, particularly in manufacturing, are facing pressure to raise prices, principally as a result of the cost of raw materials and other overheads.
Commenting on the results, Caroline Williams, Chief Executive of Norfolk Chamber of Commerce said:
“As we start 2017, Norfolk businesses are continuing to trade through uncertainty, and are looking to seize opportunities as they arise. The QES findings suggest that business communities across Norfolk and the rest of the UK remain resilient, and many firms are expecting continued growth in the months ahead.
“Inflation has emerged in our survey as a rising concern for many businesses. Both manufacturing and services firms say they are under pressure, particularly from the rising costs, which are squeezing margins and may weaken future investment. “It is therefore vitally important that our local Councillors, together with our MPs, work hard on our behalf to bring investment into our County to help improve the business environment in order to encourage business growth.”
Key Norfolk findings in the Q4 2016 survey:
Overall, the figures for both sectors indicate continued expansion, but at a lower level for the services sector than before the EU referendum
There was a considerable rise in the balance of firms in both sectors expecting the prices of their goods and services to increase over the next three months, with the balance for manufacturers rising from +29% to +55%. This is the highest on record in the manufacturing sector, and the highest since Q2 2011 for manufacturing firms. This pressure is predominately as a result of an increase in raw material prices following the post-referendum devaluation of Sterling
In the manufacturing sector, the balance of firms reporting improved export sales remained broadly steady, slightly increasing from +13% in Q3 2016, to +18%. The balance for export orders is +22%, a rise from +13% in the previous quarter. Both balances have shown a marked increase from the same quarter last year, where they both languished in negative territory (orders at -3% and sales at -8%)
Domestically, the balance of manufacturers reporting increased sales rose from +7% to +24%, and those reporting increased advance orders rose by 10 points to +10%. The balance for services firms rebounded slightly, after falling considerably in the last quarter. Domestic sales were up from +10% to +24% and orders rose from +0% to +20%.
The percentage of manufacturing firms reporting recruitment difficulties decreased from +86% to +78%. Whilst the service sector recruitment difficulties increased from +55% to +68%.
In the last three months, the balance of service sector firms hiring more staff rose from +9% to +19%, although manufacturing firms reported only say a slight increased from +32% to +34%.
Having dipped in the last quarter, the manufacturing sector are reporting higher balances of firms investing in plant and machinery, with an increasing balance from +13% in Q3 to +27% this quarter.
More firms in both sectors are reporting confidence that their turnover will increase. The balance of manufacturers rose from +39% to +63%, while services increased from +28% to +35%. While confidence in profitability also rose from +13% to +52%, it rose from +6% to +20% in the services sector.
Commenting on the National results, Suren Thiru, Head of Economics at the BCC, said:
“Having slowed significantly in the previous quarter, the UK services sector has rebounded, although it’s not yet back to levels seen at the start of the year. Nonetheless, the service sector is likely to have been the key driver of growth in the quarter.
“Manufacturers, particularly those that export, continue to report positive indicators. However, while some firms will be benefitting from the depreciation in the value of the pound, there is currently little evidence that it is providing a material boost to overall export growth. The UK’s manufacturing base continues to struggle with long-term structural issues, with businesses continuing to report considerable recruitment difficulties. The government must work to address the skills gap, while also ensuring that businesses have access to the workers they need from overseas.
“There is further evidence that rising prices will be a key challenge to the outlook for the UK economy over the next year, with the significant rise in the cost of raw materials increasing the pressure on firms to raise prices in the coming months. While growth is likely to have remained on trend in the quarter, the UK’s growth prospects in the near-term are expected to be more subdued, weighed down by rising inflation and the uncertainty surrounding Brexit.”
Q3 UK GDP growth revised up and latest QES points to solid growth in Q4.
Higher inflation and uncertainty over Brexit likely to weigh on UK’s growth prospects.
US Federal Reserve raises interest rates and further rises are likely in the coming months.
UK growth was revised upwards with a recorded growth of 0.6% against an estimate of 0.5%. The upwards revision was driven by stronger business and financial services output. The latest Quarterly Economic Survey showed that both the manufacturing sector and the service sector increased. There results suggest that the UK economy grew in line with historic trends.
UK inflation continues to rise, with prices of clothing and motor fuels being the main contributors to this rise. The outlook for UK growth remains weak, with continued uncertainty over Brexit weighing down future growth prospects.
The US Federal Reserve raised interest rates by 0.25 percentage points to a target range of 0.5% and 0.75%. This is the first increase since December 2015. Further rises in US interest rates are expected in the coming months which will place further downward pressure on the value of Sterling.
The British Chambers of Commerce (BCC) has published a survey of businesses, which shows that just over a third of companies (34%) have had to increase their wage bills since the introduction of the National Living Wage (NLW) in April 2016.
The survey of more than 1,600 business leaders across the UK, undertaken in August 2016 and supported by Middlesex University, revealed that many companies affected by the introduction of the NLW have already changed their recruitment plans or planned to do so in the future. A quarter of affected firms (25%) have reduced recruitment in response, and 34% plan to do so if the NLW rises to £9 per hour by 2020. Others are looking at changes to staff hours, benefits or pay growth.
These changes reflect the rising cost burden on many companies. Although the majority (65%) of firms pay their staff above the NLW of £7.20 per hour and have not been affected, 25% of those that were affected have increased their wage bill slightly, and 9% have increased their wage bill significantly.
The businesses most exposed to the NLW have largely absorbed the increase in costs for now, but plan to pursue cost reduction measures if the NLW increases to £9 per hour. The BCC urges the government to use caution with future NLW increases.
Key findings in the survey:
Most businesses pay their staff above the NLW, but more than a third have increased their wage bills since it was introduced in April 2016
Of the firms whose wage bill increased because of the NLW, most have not yet made major changes, but more of these firms expect to do so if the NLW rises to £9 by 2020
Only 34% of businesses affected by the NLW raised prices to offset the cost, but 63% would do so if it rose to £9 by 2020
Of the businesses affected by the introduction of the NLW, 25% reduced recruitment in response, 18% reduced staff hours, 18% reduced pay growth, 24% reduced staff benefits, 25% reduced recruitment, and 37% made no changes
If the NLW increases to £9 per hour by 2020, 25% would reduce staff hours, 29% would reduce pay growth, 33% would reduce staff benefits, 34% would reduce recruitment, and 13% would make no changes
Commenting, Caroline Williams, Chief Executive of Norfolk Chamber, said:
“A decent wage can make a huge impact on employees’ lives and their performance at work, and many Norfolk businesses are able to pay above the NLW.
“However, a significant number of Norfolk firms have already had to re-balance their books to meet the cost of the NLW, which can have a knock-on effect on recruitment or growth plans. Many firms would have to change their business models, by increasing prices and reducing staff, if the NLW increases to £9 per hour by 2020.
“Norfolk Chamber believes that the government needs to take an evidence-based approach to setting the NLW. The rate should be set by the Low Pay Commission and be determined by the state of the economy, weighing up the various pressures businesses face. Further NLW increases need to be proportionate, reflecting business uncertainty, slowing growth and high input costs, to avoid having a negative effect on employment.”
David Williams, Director Corporate Engagement at Middlesex University, added:
“While our research has captured the current sentiments of business around the NLW, the potential rise to £9 per hour is still three years away. This means that businesses have an opportunity to adjust their strategies, as they are having to do with other initiatives such as the apprenticeships programme.
“It is important that Government supports business through these transitions so that employees in the UK can earn a fair wage for their work and businesses benefit from a satisfied and motivated workforce.”
Commenting on the trade statistics for November 2016, published by the Office for National Statistics, Suren Thiru, Head of Economics at the British Chambers of Commerce (BCC), said:
“The widening of the UK’s trade deficit in November is disappointing, and signifies a considerably weaker trading position than the average for the year. While exports increased slightly in the month, this was more than offset by a record rise in imports, confirming that there is little evidence that the fall in the value of the pound is boosting the UK’s overall trade balance.
“Trade is likely to make a greater contribution to UK GDP in the next few years, as the persistent currency weakness feeds through into improved price competitiveness for some exporters, and diminishes demand for imports. However, the extent of any improvement is likely to be curbed by subdued global trade growth, and the higher cost of imported raw materials.
“In order to achieve a meaningful improvement in our export performance, the government must do more to provide businesses with direct support to access new markets.”