Chamber News

The British Chambers of Commerce (BCC) has today (Wednesday) downgraded its UK GDP growth forecast, from 2.6% to 2.4% in 2015, from 2.7% to 2.5% in 2016, and from 2.7% to 2.5% in 2017.

Weaker than expected net trade and manufacturing figures were the main reasons for the leading business group’s downgrading of its growth forecasts. The BCC believes the UK economy is set to continue expanding at a moderate pace, mostly driven by strong growth in the service sector and in consumer spending.

Key points in the forecast:

• UK GDP growth forecast downgraded, from 2.6% to 2.4% in 2015, from 2.7% to 2.5% in 2016, and from 2.7% to 2.5% in 2017
• The downgrade is mainly due to weaker than expected trade figures and a worse than predicted manufacturing performance, largely as a result of falling global prospects in recent months
• Lower than predicted actual GDP growth in Q3 2015 and downward ONS revisions of earlier estimates also contributed to the BCC’s downgrade
• Quarterly UK GDP growth is expected to average just over 0.6% per quarter from Q4 2015 onwards, in line with the economy’s long-term growth trend
• The service sector is forecast to grow by 2.7% in 2015, 2.9% in 2016 and 2.9% in 2017 (revised slightly from 2.8% in 2015, 2.9% in 2016 and 2.9% in 2017 in the previous forecast)
• The manufacturing sector is expected to contract by 0.2% in 2015, followed by growth of 0.7% in 2016, and 2.0% in 2017
• The first interest rate increase to 0.75% is expected in Q3 2016

Caroline Williams, Chief Executive of Norfolk Chamber said

“Official data is starting to reflect what the Quarterly Economic Survey has been showing all year – that our persistently weak trade performance and current account balance are impacting our overall growth. Similarly, the manufacturing sector has been hit badly by falling global prospects, tipping an earlier prediction of growth in 2015 to an expected contraction.”

John Longworth, Director General of the British Chambers of Commerce, said:

“We cannot rely so heavily on consumer spending to fuel our economy, especially when driven by increased borrowing. We have been down this path before, and know that it leaves individuals and businesses exposed when interest rates do eventually rise.

“Not all debt is bad though. Better access to growth funding and working capital will help UK firms to achieve the scale needed to expand into export markets, which in turn creates jobs and growth at home. Investment in infrastructure is also crucial in enabling businesses to get their goods and services to market.

“The UK still needs to see a fundamental shift in its economic model if we are to remain relevant and prosperous in a changing world economy. Anyone who says that the job is nearly done needs to look again at the trade deficit, current account position and long-term business investment – and realise there’s still a long way to go.

“Government and business need to work together to provide UK firms with support similar to our international competitors if we are to begin to turn the tide of our trade deficit.”

David Kern, Chief Economist at the BCC, said:

“Despite our downgraded forecasts, GDP is likely to continue expanding broadly in line with the UK economy’s long term growth trend. However, services and household consumption remain the main drivers of UK growth, and their contribution to GDP is set to rise even further in the next few years.

“International uncertainties, coupled with undue reliance on excessive personal debt and a falling savings ratio, pose serious potential risks for the UK economy, although rising earnings and disposable incomes, lower inflation and a strong labour market will help growth.

“These dangers facing the UK economy make it important to sustain areas of domestic strength in order to underpin UK growth. While we expect the first increase in UK interest rates in Q3 2016, we believe that rising international uncertainty provides strong arguments for the MPC to delay this.”

Other elements from within the forecast

Main components of demand

• Annual average growth in household consumption is forecast to accelerate to 3.1% in 2015, before slowing to a still strong rate of 2.7% in 2016 and 2.6% in 2017
• UK business investment is predicted to grow by 6.2% in 2015, 7.4% in 2016, and 7.4% in 2017
• Our forecast is that the real net trade deficit will fall from 2.8% of GDP in 2014 to 2.6% of GDP in 2017, a much smaller fall than we predicted in Q3
• Growth in real exports is forecast to be 3.5% in 2015, 3.4% in 2016, and 3.0% in 2017

Main sectors of the economy

• Service sector output is forecast to grow by 2.7% in 2015, 2.9% in 2016 and 2.9% in 2017. The share of services in total UK output is likely to rise further in the next few years
• Manufacturing output is expected to record negative growth of -0.2% in 2015, followed by positive growth of 0.7% in 2016, and 2.0% in 2017
• Total industrial output growth is forecast at 1.1% in 2015, 0.8% in 2016, and 1.3% in 2017
• Construction output growth is forecast at 2.3% in 2015, 0.9% in 2016, and 2.0% in 2017

Official interest rates

• The first increase in UK official interest rates to 0.75% is expected to occur in Q3 2016, one quarter later than we previously predicted
• Further modest increases in official interest rates can then be expected, in small 0.25% steps, with official interest rates reaching 1.75% in Q4 2017

Unemployment and productivity

• The UK unemployment rate is forecast to fall from 5.3% in Q3 2015, to 5.2% in Q2 2016, 5.1% in Q2 2017 and 5.0% in Q2 2018
• Total UK unemployment is forecast to fall from 1,749,000 in Q3 2015 to 1,724,000 in Q3 2016, 1,709,000 in Q3 2017, and to 1,694,000 in Q3 2018, a net overall fall in the jobless total of 55,000 over the next three years
• Total youth unemployment (people aged 16 to 24) is expected to fall from 726,000 (a jobless rate of 15.7%) in Q3 2015, to 692,000 (a jobless rate of 14.7%) in Q3 2018, a net fall of 34,000
• Productivity has been weak since the financial crisis, but has risen over the past year, and we expect a further gradual improvement in the next few years

Public finances

• The UK public finances have improved in the current financial year, although there was a setback in October 2015
• The Chancellor’s new and more flexible medium-term fiscal consolidation timetable, outlined in the November 2015 Autumn Statement, is challenging but realistic
• We are now predicting that UK public sector net borrowing will move into surplus in 2019/20, which is also in line with the OBR’s November 2015 forecast

Inflation and earnings

• Annual CPI inflation will stay around zero for the next few months, before edging up slowly from Q1 2016 onwards, but will remain below the 2% target at least until mid-2017

• In annual average terms, we are forecasting annual CPI inflation at 0.1% in 2015, 1.1% in 2016 and 2.0% in 2017. In Q3 we predicted 0.1% in 2015, 1.2% in 2016 and 2.0% in 2017
• We are now predicting that total earnings growth (total pay including bonuses) will average 2.5% in 2015, 3.3% in 2016 and 4.0% in 2017
• The new earnings forecasts are slightly lower for 2016 and 2017 than those made in Q3

Today marks the soft launch of the Government’s National Living Wage campaign.

The campaign is aimed at ensuring employers are aware of and comply with the new legal requirement. It is also designed to ensure eligible workers know that they are entitled to the NLW, and what to do if they are not being paid the correct amount.

This ‘soft launch’ phase, from now until mid-January, is focused on making sure that employers know about the NLW, know when it is coming, and what they should do to prepare their businesses for it.

So are Norfolk employers prepared – do they know when it is coming, and what they should do to prepare their businesses for it?

The Government has advised four simple steps for employers to take – as soon as possible – to make sure that they are ready.

• Know the correct minimum rate of pay -£7.20per hour for staffaged 25 and over
• Find out which members of your staff are eligible for this new rate
• Update the company payroll in time forApril 1, 2016
• Tell staff about any changes as soon as possible

The Government has provided a toolkit, which should give employers the information and assets they need to ensure that employers and employees know about the National Living Wage.

Caroline Williams, Chief Executive of Norfolk Chamber said:

“It is important that all businesses, both large and small, understand the new National Minimum Wage regulations and take the necessary steps to ensure they are compliant by 01 April 2016.

“The NLW will leave some businesses with a large increase in wage bills to adapt to over the coming months. The Chamber will continue to call on politicians to recognise that the UK economy is still fragile and to heed the Low Pay Commission’s considered recommendations for future wage rates, if they are to reassure businesses who may be looking at their recruitment plans for the year ahead.”

Preliminary work on site has started on Norwich Northern Distributor Road (NDR), Norfolk County Council announced today (Tuesday 8 December).

The start, on land already controlled by the Council, comes less than two weeks after Full Approval and the release of national funding was announced in the Chancellor’s Autumn Statement (25 November). Since then, Norfolk County Council has moved quickly to instruct Balfour Beatty, the main contractor for the project, and to serve notice on landowners of its intention to take possession of land needed for the road.

The preliminary work, including clearance of vegetation, archaeology, utility service diversions and some drainage lagoon excavations, will be stepped up in January along the whole footprint of the scheme. This will prepare the route before construction of the new road startsaround the end of March, with completion of the main works early in 2018.

Today’s start on site announcement took place near Rackheath, where ground works are being carried out for a bat roost barn – one of the manywildlife and environmental protection measures built into the project. The Leaders of Norfolk County Council, Cllr GeorgeNobbs, and Broadland District Council, Cllr Andrew Proctor, were joined by Chris Starkie, Managing Director of New Anglia LEP, and Stephen Tarr, Managing Director, Major Projects, Balfour Beatty, to mark the transition from the lengthy planning, project developmentand approval process to actual work on site.

Once complete, the 20km dual carriageway, runningfrom the A47 at Postwick to the A1067 Fakenham road, will take thousands of vehicles a day off congested and unsuitable roads in and around Norwich. As well as easier journeys and relief for local communities, the NDR will:

• Pave the way for a range of further ‘Transport for Norwich’ improvements in and around Norwich.
• Improve accessibility and journey times inBroadland and to and fromNorth Norfolk.
• Provide a high quality linkto Norwich International Airport from the A47 trunk road.
• Improve access to existing and planned business and housing areas.
• Give a£1billion boost to the local economy.

This preliminary work, including clearance of vegetation, archaeology, utility diversion and some drainage lagoon excavations, will be stepped up in January along the whole footprint of the scheme. This will prepare the route for construction of the new road, which will start around the end of March 2016 and is expected to take less thantwo years to complete.

A brief history of Norwich Northern Distributor Road

It has taken many years for proposals for a Norwich Northern Distributor Road (NDR) to reach the point where work has started on site.The idea was floated in the 1990s after the opening of the A47 Southern Bypass, but the lack of funding opportunities led to it being shelved. The current scheme emerged from a 2002/3 update of the Norwich Area Transport Strategy (NATS).

Initial stages:

2003

• NDR gains 78% support as key element of NATS.

2004/2005

• Route option consultation

2005

• September- Council drops western section on environmental grounds and adopts current route.
• Timetable envisages construction starting 2010, road open 2012.

Scheme development and setbacks

2008

• Major Scheme Business Case approved by Cabinet.

2009

• E of E Regional Assembly supports NDR, Department for Transport (DfT) grants ‘programme entry’NDRand allocates £21m from Community Infrastructure Fund (CIF) for Postwick Hub. Start of works put back from 2010 to 2012.

2010

• February – DfT allocates £67.5m for NDR to A140 (in addition to PostwickCIF allocation). County Council agrees to underwrite cost of continuing to A1067.
• General Election – New Coalition Govt withdraws NDR and Postwick allocations. NDR goes into ‘Development Pool’ process with DfT to re-establish funding.

2011

• December – DfT announces combined allocation of £86.5m for NDR to A140 (£67.5m) and Postwick (£19m).

2013

• Total estimated cost of NDR (including Postwick) put at £148.55m. Postwick Hub public inquiry held and completed in July.

Final approvals phase:

2014

• Final approvals (road orders) granted for Postwick in January.
• Work starts in May.
• NDR enters NSIP development consent procedure. Examination begins 2 June 2014, ends 2 December.

2015

• 2 June: Development Consent granted by Secretary of State for Transport.
• Costs rise to £178.95m. DfT, New Anglia LEP and Norfolk County Council agree to cover increase.
• 25 November: Full Approval and release of national funding announced in Autumn Statement.
• 8 December: Norfolk County Council announces start on site of preliminary works.
• Main Postwick Hub junction works due for completion before the Christmas holidays.

The EU and Vietnam have approved a new free trade agreement worth £20 million a year for UK businesses exporting to Vietnam.

The EU and Vietnam have today (2 December 2015) approved a new free trade agreement that will ease trade of products and services between the UK and Europe with the Vietnamese market. In practice the deal means 99% of tariffs will be eliminated – worth £20 million a year for UK businesses exporting to Vietnam.

Commenting on the deal, the Business Secretary Sajid Javid said:

“Today’s free trade agreement with Vietnam, the most ambitious and comprehensive the EU has ever concluded with a developing country, is great news for British businesses enabling access to a fast-growing market of 90 million people in one of the most dynamic regions in the world – boosting export opportunities for our world-class food and drink, pharmaceutical and aeronautical sectors to benefit our long-term economic security.”

International Development Secretary Justine Greening said:

“Vietnam is a development success and UK aid has helped it make great progress on creating jobs, boosting incomes, growing its economy and reducing poverty.

“This free trade agreement reflects our changing relationship with Vietnam. It shows how our investment in overseas development can help build prosperity and stability, our trading partners today and in the future, and serve Britain’s interest.”

According to the Chartered Institute of Procurement and Supply (CIPS) Risk Index for the third quarter (Q3) of 2015, global supply chain risk remains stubbornly high.

Factors taken into account include the cross-border presence of the terrorist organisation ISIS throughout the Middle East, the subsequent re-introduction of border controls within Europe’s Schengen zone, a more assertive Russia and the easing of sanctions by the United States with regard to Iran and Cuba.

For CIPS, Dun & Bradstreet analysed 132 countries against a number of criteria, including level of exports, to assess issues and challenges along the supply chain to produce a global risk score.

This showed the global supply chain risk standing at 79.1, only slightly down from the record high of 82.4 two years ago and nearly double the pre-financial crisis level of 40.4 in Q4 of 2003.

One particular problem highlighted in the latest report is the threat to the Schengen area.

Nearly all the EU’s Member States (and a number who are not members such as Norway and Switzerland) signed up some years ago to the Schengen Agreement by which they eliminated internal border controls.

While this has produced considerable benefits for the free movement of goods over the last 20 years, the system is now coming under real strain with various Member States demanding a return to controls in order to restrict the numbers of migrants and asylum seekers trying to cross from one Schengen country (say Hungary or Greece) in order to reach their eventual goal (say Germany).

Although border crossings are taking as long as 90 minutes in the countries involved, traders who were in business before Schengen will remember that lorries could sometimes be delayed at customs crossings for several hours or even days.

The Chamber’s Representation Council today heard from Chris Starkie, Managing Director of New Anglia LEP about the progress so far with Devolution and how it could affectthe Norfolk business community.

Chris outlined the background and context for Devolution. In October 2015 a joint bid from Norfolk and Suffolk was submitted to Government and representatives from our region met with Lord Heseltine to discuss the details of the bid at the beginning of November.

Devolution is important to business, as it has the potential to strengthen our local economy. It will give our region greater clarity on funding for skills, housing, roads, rail and other infrastructure, as well as business support and will put emphasis on productivity.

Caroline Williams, Chief Executive of Norfolk Chamber said:

“Norfolk Chamber and our Representation Council are, in principal, in favour of Devolution as a way to bring greater economic growth and prosperity to our LEP region. As the Norfolk business community is the key driver for economic growth, it is essential that we ensure that businesses are kept up to date and engaged with the Devolution process to influence the outcome. In conjunction with the LEP we have put together a briefing note and FAQ that we would encourage businesses to take note of. Any queries, please contact me by email on: cw@norfolkchamber.co.uk“

Norwich City Council have released their latest economic barometer. The report highlighted:

Nationally

• The Office of National Statistics advised that the GDP (gross domestic product) increased by 0.5% this quarter (July to September).
• The Consumer Price Index indicated that households have seen little change in the prices they pay for goods and services.
• UK retail sales volumes fell in October after a drop in trading at food stores. This was the largest drop since May 2014.
• Mortgage lending increased to £21bn in October – up nearly 20% from a year ago. The total was the highest seen since 2008.

East of England

• East of England has the third highest concentration of employees in the UK for firms in the technology sector. Many of these firms have plans to strongly increase employment over the next 12 months.
• Construction workloads in the East increased with private housing and the commercial sector expanding at the fastest rate. 46% of firms in East Anglian reports an increase in their workloads, according to the RICS.
• The number of new businesses starting up in the East of England rose by 7% to 243,000.

Norwich

• Services group Norse has driven nearly £130m into the Norfolk economy.
• WiSpire, a Norfolk based internet provider has officially opened its new head office in Rackheath Industrial Estate, Norwich.
• Jarrolds saw pre-tax profits growth 40% to £3m.

For full details of the latest economic barometer click here.

Representatives from Norfolk Chamber, Norwich Business Improvement District (BID) and Norfolk County Council sat down this week to talk about the proposed improvements to the city centre, in particular the inner ring road.

At an earlier November meeting of the Norwich Chamber Council, concerns had been raised about the noticeable increase in inner ring road traffic, with particular focus on the traffic impact roadworks planned for Golden Ball/Westlegate area. It was agreed that a joint meeting with the Chamber, the Norwich BID and the County Council would be useful to clarify the improvement plans.

The impact of the NDR; the inner ring road; and specific projects such as the works on Golden Ball/Westlegate were reviewed. It was noted that the inner ring road was nearly at capacity and at peaks times was at or over capacity. The County Council advised that once the improvements to Golden Ball/Westlegate had been completed, they planned to do more detailed modelling of the inner ring road, looking in particular at the junctions.

Chairing the meeting, Chamber President, Jonathan Cage said:

“The joint meeting has helped to provide clarity on the County Council’s plans for the city centre. The Chamber and the BID agreed that closer engagement with the business community at an earlier stage would not only provide a better understanding when construction/roads works were underway, but would help provide business support to the proposed plans.”

The meeting closed with an agreement for all parties to meet again in late January/early February 2016. In the meantime, the Chamber has released a quick transport survey to allow the business community to communicate their views on how Transport for Norwich affects their business. The survey is open until 21 December 2015.

Norfolk County Council have now confirmed the formal award of the contract for the construction of Norwich Northern Distributor Road to the international infrastructure groupBalfour Beatty.

Toby Coke, Chairman of the Environment, Development & Transport Committee, said: “I am very pleased that we have at last been able to confirm the award of the construction contract to Balfour Beatty Civils. Wednesday’s Government confirmation of funding ended the long, and at times frustrating, development and approval process, but now things will start to move quickly.

“Work including some initial site clearance will be starting on site before Christmas, with the main site clearance, archaeology and utility service diversions will be underway in January followed by construction of the road itself beginning around the end of March (2016). Construction will then take place along the whole footprint of the scheme and people can look forward to the road opening by the end of 2017 or early 2018.

“Once it opens it will immediately take thousands of vehicles a day off unsuitable and congested roads in and around Norwich, bringing relief to communities that have for years endured rat-running, and vastly improving access for businesses and residents across the north-east of Norwich, Broadland and North Norfolk.”

Langley School is inspirational. We are a co-educational day and boarding school with clear values and aspirations. Our pupils are celebrated for who they are and encouraged to reach their full potential in all areas.

We are passionate about providing a wide and varied programme of sporting activities for all pupils. High standards are set for the numerous competitive teams, with an extensive programme of fixtures at all levels and for all ages as demonstrated through our Sporting Partnerships and Academies.

We pride ourselves on providing an exceptional all-round education to girls and boys from the age of 2 in our Prep School and Nursery to Sixth Form students from across the UK and overseas.

Our progressive academic curriculum and high quality teaching along with our wide raging activity programme, outstanding pastoral care and excellent facilities support every pupil’s learning journey throughout the school.

We are keen to play a part in the community and to keep close to our business colleagues at every level.

Changes to export credit policies have been agreed by the Organisation for Economic Cooperation and Development (OECD).

Members of the Organisation, including the EU, have agreed to substantially limit export-related support for coal-fired power plants and to encourage the use of the most advanced technology in energy production.

Following two years of intense discussions, the deal is said to represent an important first step towards aligning export credits policies with the global push for cleaner energy generation.

Under the new rules, export credit agencies of the OECD countries concerned will only be able to support export of coal-fired plants where no other, less-polluting power generation technology, is available.

Where only coal-fired technology is available, then financial support would be available only for the most efficient systems.

The European Commission said that the agreement is shaped in such a way as to allow for future adaptations – taking account of the latest developments in climate science, further advances in energy-generation technology, and changes to domestic policy frameworks in both exporting and importing countries.

Welcoming the agreement – which must still be formally endorsed by the EU Member States – Trade Commissioner Cecilia Malmström said that it demonstrates that EU trade policy can make a significant contribution towards the production of cleaner energy and fighting climate change.

Mrs Malmström added that she hoped other countries would follow the OECD’s lead after the forthcoming COP21 climate conference in Paris.

OECD rules on export credits apply primarily to members of the Organisation. However, it has pointed out, several key non-member states, including Brazil, China, India and South Africa, regularly attend meetings of the OECD Export Credits Group as observers and may decide to join initiatives on a voluntary basis.

Open Letter to Norfolk Chamber of Commerce from Jonathan Denby, Head of Corporate Affairs, Abellio Greater Anglia

Dear All

I’m pleased to confirm that, as of today, we are now back to operating the full normal timetable on all the local lines radiating out of Ipswich and Norwich across Suffolk, Norfolk and Cambridgeshire (plus the Marks Tey to Sudbury route), that had been affected by the diesel unit availability problems (caused by poor railhead conditions).

We did, as we committed in my email of last Friday, restore the normal timetable on the Marks Tey to Sudbury, Ipswich to Felixstowe and Norwich to Great Yarmouth lines from Monday (23 November). However, as had been outlined, the ongoing challenges of wheel damage on the trains meant that all Ipswich to Peterborough services were cancelled on Monday. From then on progress has been better than we had suggested, so that yesterday half of the Ipswich to Peterborough services ran and from today we have been able to restore the full timetable on that route, in addition to the other local lines. We now expect to provide the full timetable on all the routes in question from now on.

We are extremely sorry for the disruption and inconvenience caused to everyone affected by the extensive recent cancellations on a number of the local lines. We did all we could to minimise the impact by providing a full planned bus replacement service on some routes, rather than ending up with short notice, ad hoc cancellations which would have been even more disruptive for passengers. We have also worked hard to get trains repaired as quickly as possible, sending them to both Ilford and Derby, the two nearest locations with the appropriate equipment (wheel lathes) to repair the damaged wheels. In addition, further actions were taken by Network Rail to try and improve railhead conditions.

We are providing special compensation arrangements for passengers on the Marks Tey to Sudbury, Ipswich to Felixstowe and Norwich to Great Yarmouth lines, who will be refunded for their daily rail travel cost for all the days that the rail services were suspended and substituted with a bus replacement service. They can claim via our website or pick up a form at stations or from on-train colleagues.

Clearly this has been a very unsatisfactory episode and we are acutely aware of the frustration and problems it has caused. We will be conducting a full review of the issues in partnership with Network Rail to improve the situation for future years. As outlined on Friday, the two core issues which need to be reviewed are as follows :

1. Network Rail’s railhead treatment programme, as the railhead conditions are what cause the wheel damage and self-evidently the conditions have been far worse than ever before and the preventative railhead treatment programme has not been effective enough
2. What additional preventative and contingency train fleet arrangements can be put in place to try and prevent such damage to trains, enable quicker repairs and have quicker access to additional trains in the event that major problems occurred again

We have also discussed the issues with the Department for Transport and emphasised the need to ensure that actions identified are delivered regardless of the timing and outcome of the franchise renewal process.

Finally, we apologise again for these problems. You can be assured we are doing all we can to prevent a repetition.

Yours sincerely

Jonathan

Jonathan Denby Head of Corporate Affairs Abellio Greater Angliawww.abelliogreateranglia.co.uk