UK GDP in Q4 2011 fell 0.3% on the quarter; revised down from previous estimate of 0.2% fall
Commenting on the revised GDP figure for the fourth quarter of 2011, David Kern, Chief Economist at the British Chambers of Commerce (BCC), said:
“The revised GDP figure for the fourth quarter is disappointing, with most analysts expecting the ONS to confirm its previous estimate of a 0.2% fall. The downward revision is largely due to the new estimate that the service sector fell by 0.1% on the quarter, with the ONS previously suggesting that services were unchanged. Although the fall in investment was much smaller than expected, the improvement in net exports was not as strong as we had hoped.
“The UK economy faces huge challenges, but we still believe that GDP has returned to positive growth in the first quarter of 2012 and there will be no new recession. But the austerity measures and unresolved problems in the eurozone will continue to put pressure on the economy, so it is crucial that policies to support growth are put at the top of the agenda.
“The recent Budget has not done enough to benefit small- and medium-sized businesses. More must be done as a matter of urgency to help firms create jobs, export and invest. While the government perseveres with measures to reduce the deficit, priorities must be reallocated within the overall spending envelope. The credit easing programme needs to be made more substantial, and the MPC must ensure that the QE programme encourages increased lending for smaller firms. Ministers must also look seriously at prospects for the creation of an SME bank.”
Commenting on the government’s decision to move ahead with crucial reforms to planning laws, John Longworth, Director General of the British Chambers of Commerce (BCC), said:
“This country’s impossible planning regime has for too long prevented our development and growth. We have said that without reform, businesses will shelve development projects, and our economy will lose out on crucial inward investment from overseas.
“Business will warmly welcome the government’s decision to push ahead with planning reform. If implemented properly, the new National Planning Policy Framework could give companies greater clarity and certainty when looking to expand. It will also allow planning to be restored to a positive tool, rather than a weapon used to fight reactionary battles against change, growth and jobs. Ministers must ensure that the new system works for companies of all sizes, whether in urban centers or rural idylls, North and South.
“The opponents of planning reform have been voluble in recent months. They have said there’s no need to change the planning system – but the evidence from good businesses trying to expand proves them wrong. The BCC’s own research shows that the complexity, cost and inconsistency of the current system discourage demand from companies that want to grow. That in turn limits economic growth. So a failure to reform the planning system would not just be a blow to business’s bottom line. It would also undermine Britain’s ability to pay for the public services we all want to see.
“No one in business wants to concrete over the countryside, damage the environment, or allow reckless and poor development. Businesses understand the need for planning to promote sustainable and responsible growth. But in its current form, that system limits even the most modest expansion, tying companies up in red tape, heaping costs upon owners and discouraging firms from applying in the first place.”
On the ‘presumption in favour of sustainable development’:
“We welcome the government’s decision to maintain a presumption in favour of sustainable development at the heart of the new system. This presumption will encourage growth while retaining the environmental safeguards that have long been part of the British planning system. It will also provide a powerful incentive for local authorities to complete their local plans to guide growth if they do not already have one in place.”
On the use of brownfield land first:
“The reinstatement of a ‘brownfield-first’ approach clarifies the government’s original intention in the draft. While we broadly support this change, local authorities must work to ensure this supports future business growth. An adequate supply of commercial land must be maintained.”
On the greenbelt:
“Local authorities must be careful not to score an own goal by putting too much protection around greenbelt land, some of which has little amenity value and could be better used to provide jobs and homes. Our cities require an adequate supply of land for commercial development, and in some cases this may require making the tough choice to use close-by greenbelt areas, rather than see environmentally-unsustainable development many miles away.”
On implementing the policy:
“We welcome the additional detail on how the changes will be implemented. But government and local authorities must work hard to provide certainty and consistency for businesses looking to expand over the 12-month transition period.”
BCC research shows:
70% of applicants had to pay for planning support during the application process, demonstrating the system’s complexity and cost
21% of businesses that needed planning permission but did not submit an application said it was because of negative perceptions of the planning process, demonstrating discouraged demand
Of those that considered applying but did not, 44% said their decision damaged their plans for growth or constrained output, demonstrating negative economic impact
65% of those who had applied for planning permission in different parts of the country said that they received different advice across local authorities, demonstrating inconsistency and complexity
Over half (53%) of applicants said that when a decision on an application is finally reached, it runs contrary to the advice of expert planning officers. This shows that under the current system politics too often trumps the need for growth.
Commenting on the threat of a strike by fuel tanker drivers, Caroline Williams, Chief Executive of Norfolk Chamber of Commerce said:
Norfolk is a rural county and relies heavily on access to fuel, add in the fact that Norfolk has a high percentage of small to medium size businesses and it shows that a fuel strike could be very detrimental to businesses large and small. – Caroline Williams
“Norfolk employers are working flat out to keep their businesses afloat and deliver growth during challenging economic times. The last thing they need to contend with is a fuel strike, which could have a damaging effect on their businesses. Norfolk is a rural county and relies heavily on access to fuel, add in the fact that Norfolk has a high percentage of small to medium size businesses and it shows that a fuel strike could be very detrimental to businesses large and small.
Not only will firms struggle to access the goods they need to run their business, staff won’t be able to get to work, and smaller companies will be forced to shut down and lose takings. Public services could end up being affected, and parents who can’t get childcare will have to take time off and lose pay. Furthermore, many Norfolk jobs depend on sending goods to ports and markets overseas.
“People have already started panic buying, which will lead to further shortages and make the problem even worse. For this strike to go ahead would be totally reckless. With the Queen’s Jubilee and the Olympic Games only months away, the world’s eyes are watching the UK and any decisions to strike will only tarnish our reputation to global investors.”
The government today launched its National Loan Guarantee Scheme, which is intended to help businesses with a turnover of less than £50m access funding more cheaply.
The guarantees will apply to new term loans, hire-lease arrangements and refinancing of loans (where the term amount has changed). Please see the attached information from the government, designed to help businesses understand the scheme. Currently, the banks participating in the scheme are RBS, Lloyds, Santander, Barclays and Aldermore (further banks may join).
Grants of between £25,000 and around £1 million are available to enable “significant game-changing, transformational performance in farm, forestry, tourism, agri-food and micro businesses in rural areas.” Grants will be a maximum of 40% of project costs and must be matched by private funds. Outline applications need to be submitted by 30 April and applications in upland and Rural Growth Network areas will be prioritised.
BCC’s Quarterly Economic Survey for Q1 2012 shows encouraging signs of growth, but the pace of recovery is still too slow
Caroline Williams, CEO Norfolk Chamber of Commerce: “Norfolk and the rest of the UK has the potential to recover, but to achieve that the government has to set businesses free to grow”
The British Chambers of Commerce’s new Quarterly Economic Survey (QES) released today (Tuesday) shows encouraging results for Q1 2012, with most balances recording increases on the last quarter. The new survey, comprising almost 8,000 responses from businesses across the UK, shows a welcome improvement on the results of Q4 2011 which pointed towards stagnation.
While the results are more encouraging than the previous quarter, they show that growth in Norfolk and the rest of the UK is still too weak, with the balances still below those seen in 2007 before the recession. Many manufacturing balances are now at a satisfactory level, but the service sector balances are sluggish.
Balances measuring domestic and export activity across firms showed welcome increases, and more businesses are looking to invest in employing more staff, training, and plant and machinery. However, cashflow is still a real problem, and despite concerns about inflation decreasing, recent increases in oil and food prices may alter this over the next few months.
Domestic orders The Norfolk manufacturing sector saw an increase in domestic sales and orders from the last quarter. This is also reflected across the rest of the East of England and at a national level. However Norfolk’s service sector saw a reduction in both sales and orders from the previous quarter. Nationally the service sector showed a small measure of improvement:
Norfolk manufacturing home delivery results went up 20 points to +32%, and home orders rose 13 points to +19%. However in the Norfolk service sector, the home deliveries balance dipped slightly from 18% to 15% and the home orders balance dropped from 9% to 6%
Exports Export sales and orders in both the manufacturing and the service sectors continue to improve with Norfolk, East of England and the national results all showing increases from 2011:
Balances recording exporting activity for Norfolk manufacturers strengthened in Q1 2012 and rose by 16 points to +37% – a level not seen since Q3 2010. The Norfolk service sector, whilst improving its orders, showed a slow down on actual deliveries in the last 3 months
Though stronger than domestic orders, Norfolk exports are still below levels seen in the BCC’s Quarterly Economic Surveys prior to the recession
Employment Figures for the last 3 months continue to show a downwards trend in both the Norfolk service sector and the manufacturing sector. However Norfolk employers are still showing some optimism for improvement in these figures, with both sectors recording increases:
The manufacturing employment balance is stronger at +14%, than the service sector balance, which is still weak at 3%
Firms in both sectors are more optimistic about future recruitment than during Q4 2011. The balance of Norfolk manufacturing firms looking to increase workforces increased by 7 points to +19%, a level not seen since Q3 2011. In the Norfolk service sector, figures surged by 15 points to +25% – a level last seen in Q1 2011
Business confidence & investment Confidence across both sectors improved in the last 3 months. Norfolk businesses are showing optimism in both turnover and their expected profitability for the next quarter. Both sectors are also advising that investments in plant, machinery and training are also increasing:
The balance measuring Norfolk manufacturers’ expectations for increasing turnover and profitably jumped to levels last seen in Q4 2010. Among the service sector, turnover confidence increased to +54% (last seen in Q4 2010), and profitability confidence rose to 50% (back to levels in Q4 2010)
More Norfolk firms are looking to increase investment. Plans by Norfolk manufacturers to invest in plant and machinery increased to +27% (the strongest level since Q4 2010), and intentions to invest in training increased by 10 points to +31%. For the service sector in Norfolk, the results were mixed with the balance measuring investment in plant and machinery dipping by 2 points to +9%, whilst the training balance rose 2 points to +25%
Cashflow Balances measuring cashflow (the movement of cash in an out of a business) remain weak, and are now in negative territory for both the manufacturing and the service sector in Norfolk. Overall both the Norfolk manufacturing sector and the service sectors have advised that they expect to have to increase prices over the next 3 months. This is reflected at a regional and national level as well. Norfolk manufacturers in particular, have advised that price increases were expected due to raw material costs rising:
The manufacturing cashflow balance fell heavily by 25 points, to -22%. The services cashflow balance also dropped by 13 points, to -16%
Both the sectors reported a decrease in their operating capacity, with only 27% of Norfolk manufacturers and 36% of the Norfolk service sector operating at full capacity
Commenting on the results, Caroline Williams, CEO of Norfolk Chamber of Commerce, said: “It is encouraging to see that businesses are feeling more confidence at the start of 2012 than they were at the end of 2012. Norfolk businesses are showing optimism in both turnover and their expected profitability for the next quarter. Both sectors are advising that investments in plant, machinery and training are also expected to increase. However, the Norfolk economy is still facing huge challenges and the recovery is still too slow.
The results of the Quarterly Economic Survey point to a welcome but modest improvement in the Norfolk economic situation. The UK economy will likely avoid a recession, though the erratic construction figures may distort the ONS estimate. On the basis of this survey, the British Chambers of Commerce are now predicting quarterly GDP growth of 0.3% in Q1 2012, in line with the OBR’s recent forecasts. However, growth is likely to remain low for some time, and a return to a more normal pace is unlikely until 2013.
The BCC forecast for 2012 GDP is 0.6%. Their prediction is lower than that of the OBR* for two reasons. Firstly, we are still concerned that the unresolved problems in the eurozone may trigger new upheavals later this year. Secondly, in view of the increases in oil and food prices since January, our current forecast is that the fall in UK inflation over the next 12-18 months will be slower than first expected.
“With domestic demand in Norfolk remaining weak and unemployment likely to increase over the next year, every effort must be made to boost growth and empower the private sector to create jobs. While the government perseveres with efforts to cut the deficit, it must reallocate priorities, within the spending envelope, towards growth enhancing policies. Red tape must be cut more aggressively, the credit easing programme must be made more effective, and the MPC must do more to ensure that the huge QE programme encourages increased lending to viable SMEs.”
Commenting on today’s Monetary Policy Committee (MPC) decision, David Kern, Chief Economist at the British Chambers of Commerce (BCC), said:
“Following the February increase in Quantitative Easing (QE), the decision to keep interest rates and the QE programme on hold was widely expected. With QE still being implemented, and given the MPC’s self-imposed practice of only buying gilts, this was the right decision. However, last month two MPC members voted for an increase in QE to £350bn. While support for this may be strengthening, we believe that adding to QE would be unnecessary.
“We supported past increases in QE because they eased pressures on the banking system and helped to underpin financial stability. However, this has not led to meaningful increases in lending to small businesses, and the benefits to the real economy have been limited. Increasing QE now would only have a marginal effect. There is ample liquidity in the financial system and there is no need to drive down yields on government bonds further.
“The main policy aim must be boosting the unduly low rate of economic growth by increasing lending to viable businesses. To achieve this, it is vital to make the new credit-easing scheme more substantial. But the MPC also has a part to play. The committee should reconsider its reluctance to include assets other than gilts in the QE programme, such as securitised SME loans. This will make the banks less risk averse, and will help to improve the flow of lending to credit-worthy firms.”
The London 2012 Olympics may well be a once in a lifetime opportunity (the last time the Olympics were held in London was 1948) for many of us to experience the Olympics first hand. This has the potential if not handled correctly to cause friction between employees (who wish to attend or volunteer at the Games) and employers (who have businesses to run and staffing levels to maintain.
ACAS have issued some guidance for both employers and employees, which include an informative Q & A section.
Annual CPI inflation up from 3.4% in February to 3.5% in March
Annual RPI inflation down from 3.7% in February to 3.6% in March
Commenting on the inflation figures for March, published today by the ONS, David Kern, Chief Economist at the British Chambers of Commerce (BCC), said:
“The inflation figures for March were broadly as expected. However, it is disappointing that the steady fall in inflation seen since September 2011 has been reversed this month. We expect inflation to fall over the remainder of the year, but the decline will be less than the Monetary Policy Committee (MPC) has envisaged. This means that the pressures on businesses and consumers will ease, but not as rapidly as first hoped.
“With inflation falling more slowly than expected, we believe that any further increases to the Quantitative Easing (QE) programme are unnecessary. The main priority should be ensuring that the additional liquidity provided by the most recent QE increase is put to better use to improve the flow of lending to credit worthy businesses. The government’s credit easing programme should be made more substantial, but the MPC must also reconsider its reluctance to purchase private sector assets.”
Tidal Transit Limited provides access, transport and crew transfer services to the industries of the North Sea. Operating from the North Norfolk coast we specialise in safe, speedy and efficient travel for those working in the offshore wind energy sector. Our fleet of custom-built, high specification wind farm work boats offer unparalleled stability and are crewed by fully qualified personnel with a thorough local knowledge and maritime experience.
Tidal Transit Limited was incorporated in January 2011 having formerly traded at Norfolk Fishing Trips under the management of Adam Wright of Thornham. Norfolk Fishing Trips had been running since 2005 offering day charter fishing trips from Brancaster Staithe in the summer and Lowestoft in the winter. It evolved into Tidal Transit to make the most of the growing offshore energy sector around the UK and especially wind.
Since January 2011 Tidal Transit Limited has raised over £2m for funding the development of its fleet of new purpose built offshore wind support vessels. We took delivery of Ginny Louise in December 2011 and Eden Rose in April 2012. The Company plans to build a further 8 vessels upon the same design which we aim to be available during the next 2 years.
Adam Wright (Operations Director) and Leo Hambro (Commercial Director), are in the EDP Future 50 for 2012 and Tidal Transit’s vessels were finalists in EEEGR 2012 Innovation Awards.
Ginny Louise is working for SSE on the Greater Gabbard Wind Farm. Eden Rose will arrive in the UK on 18th April and is looking for work Katie Louise returned to Brancaster Staither for the summer season on 2nd April.
New Chamber member Saxon Air is the fastest growing Private Air Charter company in the UK. Established in April 2007 by founders Christopher Mace and James Palmer having a combined experience of over 20 years in aviation, and with the financial backing of businessman Graeme Kalbraier
Since 2007 the business has gone from strength to strength, as today they own and operate a modern fleet of private jets and VIP helicopters. Early in 2010, they were awarded a 10 year contract as the preferred Handling Agent to supply ground handling services at Norwich International Airport for all non-scheduled business, private and general aviation aircraft.
With continued growth Saxon air built their £7.9m Business Aviation Centre and Hangar facility was completed in May 2011
I hope you will join me in welcoming them at the next Chamber event.
In the three months to February 2012, unemployment fell by 35,000 while employment rose by 53,000
The number of unemployed people aged 16-24 fell by 9,000 but remained above 1million
The number of people working part-time because they could not find a full-time job rose by 89,000 to the highest figure since records began
Commenting on the labour market figures published today by the ONS, David Kern, Chief Economist at the British Chambers of Commerce (BCC), said:
“With economic pressures facing the UK and ongoing problems in the eurozone, these figures were broadly positive, showing that unemployment fell and employment increased. But there are certain features which are causing concern. Youth unemployment, though slightly down, remains above one million, and the number of people working part-time because they can’t find a full-time job reached a new peak. Although the rise in employment is welcome, we can’t ignore the fact that part-time jobs have risen while the number of full-time jobs has fallen. The overall message from these figures is encouraging, however, as they show the ability and willingness of the private sector to drive recovery at a time when the public sector is likely to shrink further.
“But the challenges facing the labour market cannot be overlooked. As the deficit-cutting plan forces the government to reduce employment, it is likely that the unemployment total will increase over the next year. Every effort must be made to reduce the regulatory burden on businesses and increase the flow of lending to credit worthy firms so the private sector can create new jobs.”