Dear all,
Please find below weekly news for week commencing 12th November.
Have a good week.
Gordon Polson – Director
Federation of Bakers
Director’s Weekly News – 12th November 2018
Economic News
CBI Economic Update: Business surveys point to slower growth at the start of Q4.
Business surveys – both from the CBI and elsewhere – point to softer growth at the start of Q4, following a boost to momentum over the summer. Meanwhile, the Bank of England’s MPC decided unanimously to keep interest rates on hold, while continuing to signal further rate rises ahead; the Bank also provided some guidance on what monetary policy may look like in the event of a more disruptive outcome to EU negotiations.
The CBI’s most recent Growth Indicator highlighted that private sector growth was steady in the three months to October, with similar growth expected in the coming quarter. However, the data also showed that growth in activity had softened notably relative to the summer; this chimed with the IHS/Markit PMIs which indicated a slightly weaker start to Q4, relative to average momentum over Q3. The slowdown in growth momentum is likely to reflect the diminishing impact of the summer boost from the warmer weather and the World Cup. In addition, both our survey data and the PMIs have flagged some waning in manufacturing activity.
Elsewhere, the Bank of England’s Monetary Policy Committee (MPC) voted unanimously to maintain rates at 0.75%. Their guidance on the future path of rate rises remains unchanged. The Bank of England’s (BoE) forecasts for GDP remained broadly unchanged (predicated on a smooth transition to a future trading relationship with the EU), but they forecast higher inflation ahead due to higher energy prices in the near-term and stronger domestic cost pressures further ahead.
The BoE also gave some guidance on the outlook for monetary policy in the event of a disruptive outcome to EU negotiations. In this scenario, the MPC stated that it is prepared to either increase or decrease interest rates depending on how Brexit affects the economy, specifically on the balance of how much demand is affected relative to supply. For example, the economy’s supply capacity could be hit more quickly and to a greater extent than demand – thus pushing up inflationary pressure, and necessitating rate rises rather than cuts. Likewise, a bigger near-term hit to demand may require more monetary stimulus.
The MPC also noted that business investment has disappointed recently. Anecdotes from CBI members and data from CBI surveys continues to suggest that heightened Brexit uncertainty is holding back investment decisions. This chimes with a survey conducted by the CBI on Brexit and contingency planning where 8 out of 10 businesses stated that their investment decisions have been negatively impacted by Brexit, up from 4 in 10 last year.
Further-afield, the IMF’s World Economic Outlook continued to forecast healthy growth in the global economy to the end of next year. However, the tone of the report was notably more downbeat, with the IMF downgrading their forecasts for global growth, driven predominantly by sharp downgrades to the outlook for emerging markets. Additionally, risks to the outlook have become increasingly skewed to the downside, particularly due to rising trade tensions between the US and China. The IMF estimated that a scenario with an extreme escalation in trade tensions could reduce global GDP by 0.4% in the long-term, with the impact greatest for the US, China and other NAFTA partners.
Barclays Economic Summary: The Bank of England MPC unanimously voted to leave monetary policy unchanged at the nov’18 meeting, as we and consensus had widely expected. The statement appears to maintain a hawkish bias, with the MPC highlighting an overheating economy in the second half of next year, but at the same time acknowledging that global growth has become more uneven and that downside risks have increased.
A poor start to q4’18 as business sentiment declines following protracted Brexit uncertainty. Headline service sector PMI slowed sharply in oct’18 to the weakest level since the q1’18 storms. Combined with the sharp contraction in manufacturing PMI, the composite PMI index fell back to the lows of 2013 signalling weaker q4’18 GDP growth. The sentiment declines were broad-based across new and outstanding business as well as employment. Meanwhile, price pressures remain elevated in services.
Brexit timeline briefing: The Government has published a Brexit timeline detailing both the passage of events leading up to the referendum, beginning in 2013, and also a passage concerning future dates. Imminent significant meetings include 12 November (when the Council will meet in EU27 format and be addressed by Michel Barnier), 22-23 November (when a possible EU-UK agreement on a final draft text will then be laid before Parliament), and 13-14 December (viewed by many as the last practical date for a deal to be agreed by the UK and EU).
Food Standards Agency: Baroness Mcintosh Of Pickering has received a written response to her question, posed on 26 October: “What assessment they have made of the resources available to the Food Standards Agency to prepare for any additional responsibilities it may assume post-Brexit.” [HL11060]
Lord O’shaughnessy responded that the Government has provided £14 million of funding in 2018/19 to support the Food Standards Agency’s workstreams relating to the consequences of leaving the European Union, to help the FSA ensure there is a robust regulatory system in place to guarantee food safety, expand the National Food Crime Unit, and deliver replacements for EU programmes which carry out food safety risk management functions.
The Prime Minister has formed five new business councils to advise on how to create the best business conditions in the UK after Brexit.
Each council will aim to meet three times a year, twice with the Prime Minister and once with a senior cabinet minister, to provide high-level advice and policy recommendations on the critical issues affecting business. The councils will also be a forum for government to share developing policy ideas and seek the views of members.
Co-chaired by two business leaders, each council will have around ten members representing core sectors of the UK economy, as well as a representative from the UK’s key business groups.
The Prime Minister will welcome the co-chairs at Downing Street for the first time on Wednesday 7 November, where she will set out their objectives and they will discuss cross-cutting issues such as productivity and international investment. Going forward, the co-chairs will be responsible for preparing agendas, ensuring all members are briefed, and driving outcomes and progress on the key enabling opportunities for the businesses represented by their council:
- Jan du Plessis (Chairman, BT Group) and Carolyn McCall (CEO, ITV) will co-chair the Telecoms, Creative, Technology and Media Council. John Allan (President, CBI) and Stephen Martin (DG, IOD) will be the business group representatives
- Roger Carr (Chairman, BAE Systems) and Ian Davis (Chairman, Rolls Royce) will co-chair the Industrial, Infrastructure and Manufacturing Council. Stephen Phipson (CEO, EEF) will be the business group representative
- James Timpson (CEO, Timpson), Brent Hoberman (Co-Founder and Chairman, Founders Forum) and Emma Jones (Founder, Enterprise Nation) will co-chair the Small Business, Scale ups and Entrepreneurs Council. Mike Cherry (National Chairman, Federation of Small Business) will be the business group representative
- Paul Manduca (Chairman, Prudential) and Shriti Vadera (Chairman, Santander UK) will co-chair the Services – Financial, Professional and Education Services Council. Carolyn Fairbairn, (DG, CBI) will be the business group representative
- Dave Lewis (CEO, Tesco) and Emma Walmsley (CEO, GSK) will co-chair the Consumer, Retail and Life Sciences Council. Adam Marshall (DG, British Chambers of Commerce) will be the business group representative
The role of each business council will be to provide the Prime Minister and her ministerial team with regular, high-level advice and policy recommendations on critical issues affecting business that will enable companies to invest, grow and succeed in the UK once it leaves the European Union. The councils are to be formed as follows:
Services – Financial, Professional and Education Services:
- financial services
- professional and business services
- education and research
Industrial, Infrastructure and Manufacturing:
- materials
- aerospace
- defence
- advanced manufacturing
- automotive, aviation, ports and rail
- infrastructure, construction and housing
- energy
- environmental services
Consumer, Retail and Life Sciences:
- life sciences
- agriculture, food and drink
- consumer goods and retail
- tourism
Telecoms, Creative Industries, Technology and Media:
- digital and telecoms
- media and broadcasting
- creative industries
Small Business, Scale ups and Entrepreneurs
The business councils will be advisory, will hold no decision making powers and will report to the Prime Minister.
Other News
‘Prevention is better than cure’ – Government vision published: The Department for Health and Social Care has published a new vision entitled ‘Prevention is better than cure: our vision to help you live longer’. The announcement, from Health Secretary Matt Hancock, paves the way for a Green Paper on the subject to be published in 2019. The vision emphasises the benefits of focusing on the causes of ill health, as opposed to solely looking at curing it, from both a welfare an economic perspective. The stated aim of the vision is to ‘improve healthy life expectancy by at least 5 extra years, by 2035, and to close the gap between the richest and poorest’. Central to much of this is the relationship between dietary habits, including the content and quality of food and drinks consumed, and citizens’ wellbeing.
A section of the vision document entitled ‘Supporting healthier food and drink choices’ deals with this directly and sets out the Government’s core focuses in this area. This includes the goal to halve childhood obesity by 2030 through measures already implemented, such as the soft drinks levy, as well as proposed ones such as restrictions on the sale of energy drinks to children. The document also highlights the Government’s concern over excessive salt consumption and the health consequences this carries. It notes that by Easter 2019 the Government will release further details on plans to reduce salt intake.
Consultation launched: Food Labelling in a No Deal scenario: DEFRA has launched a consultation calling for the public’s views on food labelling in the event of a no deal Brexit. In particular the consultation asks how long respondents feel the period of adjustment ought to be before all food marketed in the UK must have a UK name and address on the label. This is to ensure that all current provisions in law can continue to work in the event of a no deal scenario. The announcement stresses that this consultation is only concerned with the possibility of a no deal scenario and thus does not propose any new policies surrounding food labelling.
FDF Webinars
|