Director’s Weekly News – 11th March 2019

Dear All,

Detailed below is the Weekly News for 11th March. Do follow the link to the AIBI Bakery Conference taking place in Manchester on 30th May www.aibi-congress2019.co.uk

Please note there will be no Weekly News for the next two weeks.

Gordon Polson

Director – Federation of Bakers

CBI Economic Update: Business surveys suggest anaemic growth in Q1 2019

Recent business surveys were noticeably downcast on the prospects for any uptick in UK economic growth at the start of 2019, following weak expansion in Q4 2018 (when GDP grew by just 0.2%). These surveys suggest that Brexit uncertainty and a gloomy global background are posing significant headwinds to the UK economy.

The latest CBI Growth Indicator reported that UK private sector activity in the quarter to February was flat for the second month in a row. The major trends behind the stagnation in activity were falling business volumes in the services sector – with a notable decline in business & professional services – and a slowdown in manufacturing growth. Meanwhile, retailers (which are part of the overall distribution sector) saw sales volumes fall for the fourth rolling quarter in a row in February. Looking ahead, private sector activity is expected to fall slightly over the three months to May, with services volumes set to fall at a sharper pace alongside continually slow manufacturing growth.

Chiming with CBI business surveys, the latest IHS Markit/CIPS PMIs also reported near-stagnant activity in February. The composite PMI suggested that the UK grew slowly in February (albeit edging higher on January), driven by weak activity in both the services and manufacturing sectors. Additionally, the construction PMI (which isn’t included in the composite measure) declined for the first time in almost a year.

Recent surveys reported various data that provide evidence of how challenging trading conditions, including Brexit uncertainty and a gloomy global background, are affecting businesses. The latest CBI Service Sector Survey reported that business sentiment in both business & professional and consumer services fell at the fastest rates since the financial crisis and EU referendum, respectively, in the quarter to February. Additionally, the February quarterly CBI Distributive Trades Survey showed that retailers’ investment intentions for the year ahead were at their weakest since February 2012. Meanwhile, the PMIs reported that manufacturers’ input inventories were at a survey-record high, which was widely attributed to stockpiling of raw materials in face of continued Brexit uncertainty. Employment in services, manufacturing, and construction – as reported by the PMIs – fell at its fastest rate in nine years, while business optimism sunk to its lowest level since the EU referendum.

UK consumers also seem to be feeling the hit from tepid growth and political uncertainty. According to the February GfK consumer confidence index, consumer confidence remains negative, driven by concerns about the economy in the year ahead. That being said, the index has not (yet) seen a sharp drop in confidence, like the one reported following the EU referendum.

FDF Brexit Message from Ian Wright: Twenty-one days to go until we leave the European Union. No one – absolutely no one – knows if we will leave on time, on what terms and what will actually happen. Whatever your views on Leave or Remain, it’s a disgrace, a complete failure of the political class.

The sense of chaos deepened with events yesterday. Andrea Leadsom, the Leader of the House of Commons, confirmed that the next vote on Mrs May’s Withdrawal Agreement will come next Tuesday 12 March 2019. Yet she gave no indication of keeping the Prime Minister’s promise, made at the Despatch Box, that if the vote is lost there will be subsequent votes to remove the possibility of a ‘no-deal’ exit and to delay our departure. Instead the country and business must wait until the vote is actually lost to know what comes next. The truth is that both main parties have stopped listening to anyone but themselves.

Yesterday also brought worrying news with immediate practical consequences. The excellent Philip Rycroft, Permanent Secretary at DExEU, is standing down. Philip has been one person at the heart of Brexit who business can trust and who appears to know what he’s doing. We can ill afford to lose him at this point in the crisis, but who could blame him if he simply wanted to stop banging his head against the brick wall of politicians’ stupidity. And at exactly the same moment we are also losing the DEFRA civil servant who is co-ordinating the Government’s Brexit preparations for food and drink. Sally Warren has been a huge help to FDF and our members (and to the entire food and drink supply chain). For both of them to depart now is really concerning, though Philip will be succeeded by Clare Moriarty, current Permanent Secretary at DEFRA, who is herself a great friend to our industry. Losing such key personnel from the bridge of the ship with the iceberg so close is really worrying.

You probably think I bang on a bit hysterically about this stuff, but every day seems to bring a new practical obstacle to a smooth Brexit. To illustrate this week has left three real issues for us to resolve. My waking moments are currently dominated by the future content of health marks, the acceptability of fortified flour in the EU and the availability of heat treated pallets for UK exporters. The fact that we are so close to the wire with none of these issues settled – and many more – speaks to the fact that the UK is just not ready for Brexit on 29 March 2019.

We do know that the meaningful vote on the PM’s Deal is next Tuesday. That is also the day of the FDF’s annual Food and Drink Industry Dinner. The vote will actually take place as we are tucking into our starter: diners will be able to watch it live. Then, over our main course, Financial Times Political Editor George Parker, will share his thoughts from Westminster. Then – we hope over pudding – we will hear from a DEFRA Minister with his take on what the vote means. Like the whole Brexit mess it’s all a bit lastminute.com. However, it’s a piece of cake for the team, given that last year we had to move the dinner to the Grosvenor House at less than 24 hours’ notice when the Hilton Ballroom was flooded.

It will be a great evening. If you’d like to join us do drop me a line: we still have a small number of places available.

As I said, no one knows what the next week will bring. I can, though, say that whatever happens all of us at FDF will do our very best to ensure that the food and drink industry emerges unscathed.

Guidance in Event of a No Deal Brexit

A number of Government departments have published guidance and updated guidance on the following areas, if the UK leaves the EU in March 2019 with no withdrawal deal:

  • • Trading and labelling organic food if there’s no Brexit deal;
  • • The chemicals sector and preparing for EU Exit;
  • • Manufactured goods: regulatory requirements after Brexit;
  • • HMRC Partnership pack: preparing for changes at the UK border after a no deal EU exit;
  • • The food and drink sector and preparing for EU Exit;
  • • Customs clearance for animals and animal products;
  • • Moving live animals or animal products as part of EU trade;
  • • Export food, drink and agricultural products: special rules;
  • • Importing animals, animal products and high-risk food and feed not of animal origin after EU Exit;
  • • Exporting animals, animal products, fish and fishery products to the EU after EU Exit;
  • • The farming sector and preparing for EU Exit;
  • • Importing and exporting plants and plant products if the UK leaves the EU without a deal;
  • • IP and Brexit: the facts;
  • • Importing, exporting and transporting products or goods after Brexit;
  • • Existing trade agreements if the UK leaves the EU without a deal;
  • • Importing and Exporting Live Aquatic Animals: EU Exit; and
  • • Non-metal manufacturing and preparing for EU Exit. Defra guidance on Food labelling changes after Brexit has been updated with information on new UK health and identification marks, which are now available to use. The guidance provides a link to an FSA update, which provides the detail.   CBI new: webinars and podcastsDuring this webinar, the team will provide you with insight and analysis on the crucial Commons votes on the 12, 13th and 14th March. Tune in to receive the latest political intel to help you position your business and preparedness as we reach an important phase in the negotiations. There will be a Q&A session for you to put your questions direct to the team. Please register here to reserve your place.With the UK’s exit from the EU looming closer, we’ll be talking about how the UK economy has been doing, and specifically how much of an impact Brexit uncertainty has had so far. We’ll talk about the outlook ahead and speculate on what a “no deal” could look like for the UK economy. Please register here to reserve your place.Coming at a crucial time for both domestic and Brexit politics, this webinar will give you the opportunity to hear the CBI’s analysis of all the big political events, and what our conversations across Europe tell us about the Brexit process. Please register here to reserve your place. 
  • NEW: Behind the Scenes: a political update – 4 April, 11:00-12:00
  • NEW: CBI Insight: economic briefing – 28 March, 11:00-12:00
  • NEW: CBI Insight: Brexit Update – 21 March, 10:00-11:00
  • Brexit Stockpiling?:According to Kantar Worldpanel, one in ten UK consumers have admitted to stockpiling food in preparation for the UK’s exit from the EU later in mar’19. In its latest grocery market share figures for the 12 weeks ending 24th feb’19, it also found that 26.0% of consumers were considering stockpiling food. However, this has yet to transfer into supermarket sales, which only grew 1.3% – the same growth experienced in q4’18. Aldi was the only retailer to report double-digit growth during the past 12 weeks, increasing sales by 10.0%, capitalising on valentine’s day-related purchases. Fraser Mckevitt, head of retail and consumer insight at Kantar stated hard-to-stockpile fresh and chilled foods made up 39.0% of the value of the average British shopping basket. He also stated that in the past there might have been a bit of a stigma about treating your loved one from a discounter that just isn’t the case anymore. Planning for the perfect date night, 10.0% of the population bought chocolate, wine, steak, shellfish or a chilled dessert from Aldi during the week of valentine’s day, helping it increase market share by 0.6 percentage points to 7.6%.

SACN – SACN Annual Report 2018

SACN published on 27 February 2019 the annual report for 2018. This report provides a summary of the work of SACN and its working groups and subgroup, including:

  • • A position statement on diet, cognitive impairment and dementias;
  • • A draft report on saturated fats and health, issued for public consultation;
  • • A report on feeding in the first year of life; and
  • • The joint SACN, NHS England and Diabetes UK working group, which continued to review evidence on lower carbohydrate diets.

Information Statement on Dietary Fibre

The Government Chemist announced that an information statement on dietary fibre had been published, in collaboration with the Institute of Food Science and Technology.

The information statement was developed and peer-reviewed through the Institute’s Scientific Committee. It provides details on, amongst other items, what dietary fibre is, how it is measured and how much should be eaten. The statement aims to help the food industry to innovate to provide attractive foods contributing to healthy eating and to help regulators and enforcement personnel understand the issues. The statement itself is available on the Institute of Food Science and Technology website.