Dear All,
Detailed below in the Weekly News which covers economic update, Covid 19 and yes Brexit-its back!, FTA Covid 19 guidance and HSE Bulletin
Have a good week.
Gordon Polson
Chief Executive – Federation of Bakers Ltd
Chief Executive’s Weekly News for 26th May 2020
Barclays Economic Update: UK manufacturing PMI stood at 32.6 in apr’20
According to IHS Markit, the UK manufacturing purchasing managers’ index (pmi) stood at 32.6 in apr’20, compared to 47.8 in mar’20.
The decline in the manufacturing pmi, which is a composite of five indices, was offset by a comparatively modest reduction in stocks of purchases and record lengthening of vendor lead times (which has an inverse contribution to the pmi level).
In apr’20, the public health emergency caused by the outbreak of covid-19 caused substantial disruption across the UK manufacturing sector and its supply chains.
Some manufacturers also experienced constraints due to closures or capacity shortages at supplier level, despite a series-record reduction in purchasing activity. Stocks of inputs and finished products both decreased during apr’20.
Eurozone productivity PMI stood at 38.0 in apr’20
According to IHS Markit seasonally adjusted eurozone productivity (pmi) compiled from IHS Markit’s national manufacturing and services pmi survey data, decreased from 44.5 in mar’20 to 38.0 in apr’20 amid the escalating covid-19 crisis.
Additionally, manufacturing and service sectors registered efficiency losses. However, the service sector witnessed the fastest decline in productivity compared to manufacturing in apr’20.
All three largest economies inside the eurozone reported declining efficiency trends. In addition, Italy reported a decline at the fastest pace
CBI RoundUp-On Friday the government announced that, from 8th June, international travellers arriving into the UK will have to self-quarantine for 14 days except for a tightly defined list of key workers. These include:
- Road haulage and freight workers
- Medical professionals travelling to help with fight against coronavirus
- Seasonal Agricultural Workers (who will self-isolate on the property where working)
This applies UK-wide, and enforcement measures will be set individually by the Devolved Administrations. This announcement will have a significant impact across a number of sectors, so we welcome the government’s commitment to keeping the policy under regular review. We will continue to work with the government on a robust, internationally coordinated plan to get passengers flying safely as soon as possible, including through innovative solutions such as the establishment of Air Bridges between the UK and low-risk countries.
On Tuesday, the Treasury released the latest figures on the Job Retention Scheme showing 8 million jobs have now been furloughed and £11.1 billion has been claimed so far. We expect details on the next steps for the JRS to be announced this week. We have been relaying the two biggest concerns for business:
- Clarity on how partial furloughing will work, and whether this could be brought in before August to help firms restart sooner
- Detail on what the business contributions to the scheme are likely to be
On access to finance, we welcomed Tuesday’s announcement from the Treasury that the cap on loans available through CLBILS will rise from £50m to £200m. This was an important step forward given the latest figures are not where they need to be, showing just under £0.6 billion has been lent through the scheme and only 17% of applications have been approved. On the other schemes, the Bounce Back Loans continue to be a standout success, with over £14 billion lent and 80% of applications approved. CBILS is also improving each week, with £7.25 billion now lent and a 50% approval rate.
Last week we also saw the first tranches of economic data which provided an initial indication of the impact this crisis has been having on our economy and people’s livelihoods, as well as an idea of what the longer-term effects might be. On Wednesday, figures from the ONS estimated UK GDP fell by -2% in Q1 driven by a sharp monthly decline in output of -5.8% in March. This was followed by Labour Market figures which showed that in the first few weeks of the crisis, there were sharp falls in both vacancies and hours worked, as well as record increases in claims for benefits.
The numbers make for sombre reading and highlight just how vital the work on the UK’s economic restart will be. This is a top priority for the CBI, and we have been communicating your questions and feedback into government. The business guidance on reopening has been largely welcomed, but as we have highlighted in our conversations with government, challenges remain:
- On PPE, transport, and schools, I spoke to Lord Deighton on Thursday about how we get the right interaction between industry and NHS needs
- More clarity is needed on how companies conduct a proper and comprehensive risk assessment
- There are a number of remaining questions on businesses’ legal responsibilities and liabilities
- And particular concerns from hotels and restaurants, that social distancing would render them financially unviable
Last week, we also saw an important development on international trade as the government launched the new UK Global Tariff which will replace the EU’s common External Tariff from 1st January 2021. The tariff will apply to all goods from countries with which the UK does not have a preferential trading relationship and helps bring some certainty and clarity for businesses thinking about their trade options post-Brexit. The CBI’s bigger and longer-term trade priority remains striking the right deal with the EU, and securing continuity agreements with countries such as Canada, Mexico and Japan. Tariffs will look very different in the event of a no-deal Brexit, with 10% being levied on every item imported to the UK in the automotive sector if we leave the EU without a deal.
The European Commission published on 20 May the ‘Farm to Fork’ Strategy for a fair, healthy and environmentally-friendly food system. Through this strategy, the Commission will pursue its work to prevent food loss and waste in close cooperation with the EU Platform. You will see that the Platform’s recommendations for action are referenced as impetus to further mobilise action by all players.
Communication from the Commission – A Farm to Fork Strategy for a fair, healthy and environmentally-friendly food system – Link to the strategy, Questions & Answers, press release and other relevant documents: https://ec.europa.eu/food/farm2fork_en
The Home Office has announced border measures that are going to be applied to all international arrivals to the UK and a short list of exemptions. These measures will be brought in from 8 June and will be subject to review every three weeks. They have been bought in to manage the risk of transmission being reintroduced from abroad to avoid a second wave of infection.The press release can be found here Further information is available here
Brexit Developments: (1) The Government published its approach to implementing the Northern Ireland Protocol, as part of meeting in full its obligations under the Withdrawal Agreement with the European Union. The command paper outlines how the protocol can be implemented in a pragmatic, proportionate way: one that protects the interests of the people and economy of Northern Ireland, recognises Northern Ireland’s integral place in the United Kingdom and its internal market, provides appropriate protection for the EU Single Market, and respects the unique circumstances of Northern Ireland.
It makes clear that the UK Government’s priority will remain strengthening Northern Ireland’s place in the United Kingdom, and above all, preserving the huge gains from the peace process and the Belfast (Good Friday) Agreement.
The paper also sets out four key commitments that will underpin the UK Government’s approach to implementing the Protocol:
– There will be unfettered access for Northern Ireland’s producers to the whole of the UK market and this will be delivered through legislation by the end of the year.
– No tariffs will be paid on goods that move and remain within the UK customs territory
– Implementation of the Protocol will not involve new customs infrastructure – with any processes on goods moving from Great Britain to Northern Ireland kept to an absolute minimum so that the integrity and smooth functioning of the UK internal market is protected.
– Northern Ireland’s businesses will benefit from the lower tariffs delivered through our new Free Trade Agreements with countries like the United States, Australia, New Zealand and Japan – ensuring Northern Ireland firms will be able to enjoy the full benefits of the unique access they have to the GB and EU markets.
Chancellor of the Duchy of Lancaster, Michael Gove, made a statement in the House of Commons today on the UK’s approach to the Northern Ireland Protocol. You can read this statement here.
(2): The Government has announced the UK’s new MFN tariff regime, the UK Global Tariff. This will replace the EU’s Common External Tariff on 1 January 2021 at the end of the Transition Period. Our new tariff is tailored to the needs of the UK economy. It will support the economy by making it easier and cheaper for businesses to import goods from overseas. It is a simpler, easier to use and lower tariff regime than the EU’s Common External Tariff (EU CET) and will be in pounds (£), not euros. It will scrap red tape and other unnecessary barriers to trade, reduce cost pressures and increase choice for consumers and back UK industries to compete on the global stage.
The Government is taking a common-sense approach to our new tariff schedule by streamlining and simplifying nearly 6,000 tariff lines, and lowering costs for businesses by reducing administrative burdens. The changes include scrapping unnecessary tariff variations, rounding tariffs down to standardised percentages, and getting rid of all “nuisance tariffs” (those below 2%).
We are also getting rid of the EU’s complex Meursing table, allowing us to scrap thousands of unnecessary tariff variations on products – including over 13,000 tariff variations on products like biscuits, waffles, pizzas, quiches, confectionery, and spreads. The UKGT also expands tariff free trade by eliminating tariffs on a wide range of products.
The Government is maintaining tariffs on a number of products backing UK industries such as agriculture, automotive and fishing. This will help to support businesses in every region and nation of the UK to thrive.
Please find the Government press release here.
Government Guidance on Face Coverings: Attached are FAQs intended to assist those who are running food businesses to navigate government guidance on face coverings: Face Coverings FAQs
They include some FAQs which employees may ask of their employer. Defra and the Food Standards Agency compiled these FAQs after stakeholders asked for further clarity on published guidance.
Food businesses are already required to conduct risk assessments that ensure the safety of the food products being made alongside the safety of the food handlers. This has not changed because of Covid-19.
Freight Transport Association Covid Guidance:
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HSE Stakeholder Bulletin: 22 May 2020
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