UK trade deficit in goods and services was £4.4bn in April 2012, compared with a deficit of £3.0bn in March
Commenting on the trade figures for April 2012, David Kern, Chief Economist at the British Chambers of Commerce (BCC), said:
The global environment will continue to pose serious challenges for our exporters at a time when they are trying to maintain their positions in international markets.
“The increase in the trade deficit was larger than expected in April. Underlying export volumes were down 7.1% on the month while imports fell by only 3.0%. The importance of one month’s figures should not be exaggerated as longer-term comparisons show that exports have been flat over the past year. This proves that our exporters are facing major challenges, especially given the increased problems in the eurozone and weaknesses in the global economy. In our recent forecast we predicted export volumes of goods and services to grow by a modest 2.6% this year. But on the basis of the figures published so far, it is likely the outcome will be weaker.
“The government’s deficit cutting measures will continue to put pressure on the domestic economy, which means that a lasting UK recovery will depend highly on increased exports, replacing imports with goods produced at home and increased business investment. The global environment will continue to pose serious challenges for our exporters at a time when they are trying to maintain their positions in international markets. British exporters have major untapped potential but the government should do more to help them overcome the obstacles facing them. Our businesses do not want handouts, but they need to see action which allows them to compete with overseas competitors. Clearer routes to market for state backed trade finance and the creation of a business bank would go some way to solving some of the problems firms currently face. We need to get behind our businesses and give them the support they need to drive an export-led recovery.”
Henry Bellingham, MP for North West Norfolk, highlighted the need for greater improvements to the King’s Lynn to London rail service. Mr Bellingham was speaking at a recent meeting with West Norfolk Chamber Council.
Mr Bellingham commented that with First Capital Connect’s franchise agreement coming up for renewal, now was the time for local businesses to lobby for improvements to the rail service.
He said: “The following three criteria should be part of any new franchise agreement: Firstly Selective Locking on the rolling stock to allow for longer trains. At present, some station platforms are unable to take longer trains, due to the length of their platforms. Selective locking would allow longer trains to stops at all stations and carriages not able to reach the platform should be locked for safety reasons.
“Secondly, the Ely junction needs to be upgraded to allow for a faster train service. Lastly, refreshment trollies should be reinstated on the train service.”
Manufacturing output for April 2012 down 0.7% on the month, down 0.3% on the year
Commenting on the manufacturing output figures for April, published today by the ONS, David Kern, Chief Economist at the British Chambers of Commerce (BCC), said:
“The fall in manufacturing output is not surprising given ongoing problems in the eurozone and the UK’s tough deficit-cutting programme. It is important to avoid pessimism as many firms have shown resilience in the face of these obstacles, and have reserved their skills base during the recession. However, the immediate outlook is difficult. Our most recent forecast has indicated nil growth in manufacturing output this year and on the basis of this figure there is a risk that the sector will record a small decline in 2012.
“The new figures will also reinforce demands for the Monetary Policy Committee (MPC) to increase Quantitative Easing (QE). This would only be helpful if the Bank of England stops focusing asset purchases exclusively on gilts and starts purchasing other assets such as securitized SME loans. We are pleased that Adam Posen has this week publicly supported such a move. Other policies to support growth are also needed, particularly more forceful deregulation and an increase in infrastructure spending within the current spending envelope.”
Research shows that nearly three-quarters of exporters don’t have an export strategy in place
The findings of a survey released today (Tuesday) by the British Chambers of Commerce (BCC) show that existing regulations and problems around accessing credit are hindering export growth in the UK. The survey of more than 8,000 businesses shows that nearly two thirds of potential exporters (63%) see access to finance issues as a reason not to trade overseas, while a quarter of companies believe that red tape, such as that associated with export licenses, is a barrier to trading overseas (25%). Furthermore, nearly three quarters of companies that are already exporting don’t have an export strategy in place.
Exporting is an important route to growth for companies at a time when the domestic economy is almost flat. Nearly half (44%) of respondents said they would be more likely to consider exporting if sales revenues deteriorated. More than half of companies that are already exporting said they would look to increase exports further if faced with a deterioration in domestic market conditions (56%).
There are still barriers which prevent non-exporting companies from trading overseas, with financial resource and access to credit as major factors (63%). Seven in ten non-exporters said cash flow and payment risk influenced their decision to export. Only 3% of businesses surveyed had used UK Export Finance, with 20% citing lack of awareness as a reason for not doing so. Regulation is still preventing companies from taking that first step towards becoming an exporter, with one quarter of respondents stating it as a barrier. Furthermore, one in three companies (36%) said that overseas regulations prevent them from doing business overseas.
Furthermore, nearly three quarters of exporters (74%) don’t have a formal export strategy in place. While many large exporters lack a formal strategy, there is a clear size divide which shows that small- and medium-sized companies are even less likely to possess one (42% of SMEs have one compared to 15% of micros). The results showed a willingness from firms to adapt their products and services to suit overseas markets, but almost half (49%) of exporting companies said they had become exporters by accident after being approached by potential buyers from overseas.
BCC recommendations:
• Create a business bank and improve service in existing banks to address issues around access to finance: Our survey shows that problems with accessing finance prevent firms from getting their foot on the exports ladder. In addition, high street banks must train front line staff to be able to explain state-backed financial products to their business customers.
• Incentivise the take up of training and mentoring: The Chamber Network is playing a leading role in linking businesses to export training and trade missions, but the government must play its part too by offering financial incentives for non-exporters that take up these services such as a reduced rate of tax on early exporting profits
• Support more businesses to proactively pursue export opportunities: Introduce a variable fee system within the Overseas Market Introduction Service (OMIS) which is operated by UKTI. If this is based on company size, it would prevent smaller firms from being crowded out. Businesses also need to be more aware of UKTI’s Tradeshow Access Programme (TAP) and the government should invest more money into the scheme.
Commenting, John Longworth, Director General of the British Chambers of Commerce (BCC), said:
“There are still not enough of our great British businesses taking their products overseas. These results show that many firms lack an export strategy, and many only became exporters by chance. We need to find ways to make our businesses think global, and provide them with the support they need to break into new markets. Not only will this help to boost the UK economy, but it will show the world that Britain remains a major global competitor and a nation to do business with.
“The government can make some simple changes which will go a long way to giving firms the confidence and encouragement they need to trade overseas. Incentivising more firms to take part in trade missions would be a start to getting more companies thinking about adapting their products for the export market. Furthermore, the creation of a state-backed business bank would help solve problems around access to finance, which a large number of firms said prevented them from exporting. We need to get behind our businesses and give them the support they need to drive an export-led recovery.”
Better Broadband for Norfolk Information Sheet 6 (8 June 2012) In May 2011 Norfolk County Council was successful in its bid to secure Governmentfunding to help provide improved broadband speeds and access across Norfolk.
In January 2012 we launched the ‘Say Yes to Better Broadband in Norfolk’ campaign andasked people to register their interest in receiving better broadband so that we coulddemonstrate the demand that exists in the county.
We want to keep the people of Norfolk informed and updated about the project and thework that is underway to provide better broadband services in the county. Please visitwww.norfolk.gov.uk/sayyesnorfolk for more information on the project.
What’s happened since the last update? We’re currently in the procurement phase of the project. This means that we’re indiscussions with potential private sector partners who will help us deliver the betterbroadband project in Norfolk. Because this is a competitive bidding process, we can’t gointo any further detail at this stage. We hope to be able to tell you more in the nextinformation sheet.
Is there anything else happening? We have got another opportunity for people to ‘Say Yes’ to better broadband in personcoming up – you’ll be able to register your interest in the Norfolk County Council tent at theRoyal Norfolk Show on Wednesday 27 and Thursday 28 June. You can also talk tomembers of the Better Broadband for Norfolk team at the show and find out more about theproject.
It’s still important that anyone who might be interested in receiving better broadband saysyes so that the project has as much information about demand for broadband services inNorfolk as possible.
If you’re not coming to the Norfolk Show, you can still sign up on the Say Yes website(www.norfolk.gov.uk/sayyesnorfolk) or by ringing 0344 800 8023 until later this summer. We’re fewer than 100 ‘yeses’ away from 15,000 since we launched the campaign inJanuary and that would be a nice milestone to pass!
If you require further information please telephone Norfolk County Council on 0344800 8020.
Annual output inflation down from 3.2% in April to 2.8% in May; annual input inflation down from 1.0% in April to 0.1% in May
Commenting on the producer price figures for May 2012, Caroline Williams, CEO Norfolk Chamber of Commerce said:
“The decline in producer price inflation was better than expected, with both output and input measures at their lowest level since 2009. On this basis, we expect consumer price inflation to continue to fall over the next few months. This will ease the pressures facing businesses and consumers and provide a boost to consumer spending.
“But the economic situation at home and abroad remains difficult, and strengthening growth should be a top priority. While the government must persevere with measures to reduce the deficit, it should re-address priorities towards growth within the existing spending envelope. The lower inflation figures may make the MPC more inclined to increase QE, but we believe its focus should be encouraging lending to credit-worthy businesses.”
The New Anglia Local Enterprise Partnership is leading the UK’s transition to a green economy.
On Monday 11th June New Anglia Local Enterprise Partnership will present its Green Economy Pathfinder Manifesto to Government at a reception in the Houses of Parliament.
Attendees will include business leaders, representatives from Government departments, environmental organisations, local authorities and community groups.
The Manifesto, called ‘Leading the Way’, sets out the barriers and opportunities for sustainable economic growth, goals and aspirations and features case studies of business and organisations which are leading the way in developing the green economy.
The Manifesto represents the opportunity to embed good practices in the region’s green economy, across businesses and organisations, locally.
New Anglia helps to grow jobs and remove the barriers to business growth in Suffolk and Norfolk. It is committed to leading the transition towards a green economy, delivering benefits across the region and nationally.
International best practice highlighted by the Manifesto ranges from cutting edge research on the Norwich Research Park to eco-building techniques being pioneered in housing developments across Suffolk and Norfolk.
The Government invited New Anglia to take the lead on the development of the green economy last November and report back with recommendations on how the UK can seize the opportunities presented by the green economy.
Andy Wood, Chairman of New Anglia Local Enterprise Partnership and Chief Executive of Adnams plc said: “The New Anglia area has a wide range of energy resources, which is why we are ideally placed to lead the growth of the green economy.
“New Anglia is committed to building the green economy in a sustainable way and to share our knowledge and expertise across the UK.
“There will be a 45% projected growth in the low carbon and environmental market by 2012/15 and we want to place the green economy at right at the heart of business success – because it makes good business sense.”
Mark Pendlington, the Director, Anglian Water Group, chairs New Anglia’s Green Economy Pathfinder Board.
“New Anglia has brought together a group of talented people with specialist expertise to develop the Green Economy Pathfinder Manifesto”, said Mr Pendlington.
“As part of the Manifesto we have featured case studies of some innovative organisations which are at the cutting edge of developing services and products which will drive forward the green economy.
“The Manifesto provides a route map for all businesses large and small to seize the exciting opportunities of green growth. This will create and secure jobs and help our goods and services to compete and win the global marketplace. It’s a route to economic recovery, and we want businesses in Norfolk and Suffolk to be leading the way – by example.”
The Manifesto will be published on the afternoon of Monday 11th June on the website www.newanglia.co.uk.
Commenting on today’s Monetary Policy Committee (MPC) decision, David Kern, Chief Economist at the British Chambers of Commerce (BCC), said:
“The MPC’s decision to maintain current levels of Quantitative Easing (QE) was the right one. Though the clamour for increasing the asset purchase programme has intensified with the worsening eurozone situation, and signs that the US and Asian economies are slowing, the benefits of additional QE would be marginal at present. However, if conditions in Europe worsen, with more pressure on Spanish banks, and heightened debt problems, then there could be a risk to the UK financial system. In that case, additional QE might be necessary over the next couple of months.
The MPC could also consider introducing a 0% or negative interest rate for deposits held by commercial banks at the Bank of England. This could discourage hoarding, and provide an incentive for banks to increase lending. The Monetary Policy Committee should also focus on helping to boost the flow of credit to businesses, in particular small- and medium-sized firms. That means considering the purchase of assets beyond gilts, for example securitised SME loans. Such a move would make the banks less risk averse lending to businesses, thus helping to remove one of the main obstacles to a sustainable UK recovery.
“We need growth in the economy sooner rather than later, and at the same time protect the UK’s credibility. The government could also address the problem of access to finance by creating a business bank.”
Eurozone problems increases pressure for more QE, but encouraging business lending would be more effective
Commenting ahead of the MPC decision tomorrow (Thursday), David Kern, Chief Economist at the British Chambers of Commerce (BCC), said:
“Most analysts expect the MPC to maintain its current policy at the June meeting, with interest rates staying at 0.5% and the Quantitative Easing (QE) programme at £325bn. However, demands for more QE have started to rise due to the worsening crisis in the Eurozone and signs that the US and Asian economies are slowing. More QE will have only marginal effects in boosting growth. But if the pressure facing Spanish banks puts the UK financial system at risk, an increase in QE may be necessary. In the meantime though, the MPC should focus on boosting the flow of credit to businesses.
“Weaknesses in business lending can be best addressed by the creation of a fully-fledged business bank. The MPC can also help by reconsidering its reluctance to purchase assets other than gilts, such as securitised SME loans. This would make the banks less risk averse and would help to remove one of the main obstacles to sustaining a recovery in the UK. We believe that if the MPC purchased private sector assets, this would encourage growth, rather than increasing irresponsible lending or interfering with credit allocation.”
The Government understands the importance of trade and investment to delivering long-term growth and prosperity in the UK and around the world. The Government’s strategy on trade and investment was detailed in the White Paper, “Trade and Investment for Growth”, which was published in February 2011.
The White Paper identified three key goals:
help UK business trade and invest more and in new markets
attract investment to the UK
strengthen the multilateral trading system, including helping developing countries benefit from trade and investment.
ONE YEAR ON….
It has been just over a year since the Government launched the White Paper. Led by the Department for Business, Innovation and Skills, and working closely with UK Trade and Investment and the Foreign and Commonwealth Office, the White Paper advocated a whole of government approach to trade and UK growth.
The Minister of State for Trade and Investment, Lord Green, has recorded a short message to acknowledge some of the achievements and challenges of the first year of implementation
Lord Green also said:
“We’re now one year on from the launch of the White Paper. I am pleased to report that we have laid much of the necessary groundwork and made some real progress. However, we are taking a long term approach and our strategy cannot be secured in just one year; this is a marathon, not a sprint.”
“Trade and investment are absolutely fundamental to rebuilding and rebalancing our economy. The UK has a strong history as a trading and investing nation and continues to be one of the world’s most attractive places to do business, but the world is changing and we cannot be complacent.”
“Encouraging businesses to export more is at the very heart of our approach. We need to ensure business, especially our small businesses, have all the tools they need to flourish, that we strengthen and improve our relationship with trade partners around the world, that we fight protectionism and ensure poor countries can benefit fully from free and fair trade.”
In supporting trade and investment in 2012, the Government will prioritise five key areas of activity:
1) Roll-out of the SME exporting campaign, to double outreach to companies to 50,000 per year by 2015 over the next few years.
This will see conferences in every region of the country; active engagement with support networks; targeted support of SMEs at trade fairs and on trade missions; and e-networking of SMEs to support mentoring and experience-sharing.
2) Marketing high value opportunities in fast growing markets
This will involve an ambitious programme of conferences and other country-specific activities, along with trade missions for key sector providers, including SMEs.
3) Showcasing inward investment opportunities, especially in key economic infrastructure developments and building on our world-class science base
This will include more proactive identification of major overseas investors; special programmes for strategically important countries; and a major and sustained client marketing progress.
4) Working to ensure a supportive financing environment for exporting and investment
This means close engagement with banks on trade finance; expanding UK Export Finance marketing efforts; and active marketing of international venture capital providers and angel investors.
5) Seizing the one-in-a-lifetime potential of the London 2012 Olympics and Paralympics through a major international business programme aimed at boosting British exports and attracting inward investment
Over the coming months they will also:
Support the EU to conclude Free Trade Agreements with India, Singapore and Canada; and open negotiations with Japan
Agree more elements of Doha; and
Find ways to press forward the international trade agenda with like-minded countries.
The Government’s commitment to open trade and investment is ambitious and long-term. It has already secured some key achievements. Their focus now is to build on this, and ensure the UK’s future prosperity
On 30 May Charles Bean, Bank of England spoke to a packed Norfolk Chamber Breakfast at Norwich City Football Club. It was a terrific opportunity for him to speak with local business people and it is great that the Chamber are able to bring their members closer to organisations such as the Bank of England.
To read more on Charles’ view on the Norfolk economy, click here
In spite of the volatility caused by the international financial crisis, developing nations remained the key drivers of growth in international trade for 2011, according to the International Chamber of Commerce (ICC).
South Asia exports, driven by soaring Indian trade with China, outperformed other developing regions in the first three quarters of 2011, but subsequently plummeted.
This year’s ICC Global Survey on Trade Finance, Rethinking Trade and Finance, notes that, after a year of upheavals, annual trade volume growth for 2011 was 6.6%, slightly above forecasts by the World Trade Organization.
However, after positive growth prospects at the beginning of the year, a series of global shocks, including the Arab Spring, the tsunami in Japan and the continuation of the global debt crises, resulted in an uneven performance for the year.
The ICC survey, which provides some of the most important international data on trade finance, suggests that the current environment is dampening prospects for 2012, with annual trade growth forecast at 5.2% this year, increasing to 7.2% in 2013.
The report – in which representatives of 229 banks in 100 countries took part – reveals that China’s trade experienced particularly volatile growth throughout the year, and exports from East Asia have fallen.
Many major developing countries in the region are experiencing a slowdown in growth due to a tightening of domestic policy initiatives introduced between late 2010 and early 2011 to combat high inflation.
The eurozone meanwhile was strongly affected by the financial and economic crises and, down 5.85%, had the highest annual decrease in export traffic.