Dear All,
Detailed below is the Weekly News for 20th August.
This will be the last Weekly News for a few weeks as I go away for a break, followed by some travelling.
Have a good week and enjoy the bank holiday.
Gordon Polson
Director
Federation of Bakers
CBI Economic Update: UK GDP growth picks up slightly in Q2.The ONS’ preliminary estimate of UK Q2 GDP showed that growth picked up slightly to 0.4% after a weather-addled Q1. Prior to the release, surveys and official data pointed to firmer economic momentum in Q2, and the outturn was in line with the Bank of England’s forecasts. Partly as a result, the Monetary Policy Committee (MPC) voted unanimously to raise rates by 25 basis points to 0.75% in August. However looking ahead, growth momentum in early Q3 looks to be more mixed.
The ONS’s preliminary estate of Q2 GDP indicated that the UK economy grew by 0.4%, marking a small pick-up in growth from Q1 (0.2%) which was hit by the bad weather. This was in line with the CBI’s expectations. Anecdote from the ONS suggested that warmer weather throughout Q2 played some role in supporting food & drink sales in the retail sector and boosting construction output. Nevertheless, the expenditure breakdown of growth was not reassuring with the largest contributions coming from fairly volatile components such as inventories and the acquisitions of valuables. Furthermore, net trade dragged sharply on growth (-0.8pp) for the first time since Q4 2016. This was driven by a large fall in exports of 3.6% (which was partially offset by a 0.8% drop in imports).
Survey data on growth in early Q3 is more mixed. The CBI’s growth indicator suggests a further (modest) pick-up in growth in the three months to July, but the Purchasing Managers Indices (PMIs) point to a slight softening in activity. In the CBI’s data, consumer-facing firms are seeing a short-term boost from recent good weather, with CBI data showing that consumer services witnessed the first expansion in volumes in five months while retail saw growth for the first time since September 2017. Nevertheless, underlying conditions for these sectors remain tough, with consumers continuing to be squeezed by weak real wage growth.
Meanwhile, the CBI’s quarterly Industrial Trends Survey showed manufacturing output growing at the fastest pace in a year. Orders grew at a steady pace, export orders in particular continuing to rise strongly. However, capacity pressures have ramped up and concerns that labour shortages would restrain capital spending increased to the highest on record. Investment intentions for “intangible” assets also turned negative, with planned spending on product and process innovation and training and re-training expected to fall at the fastest rate since 2009. Anecdote from respondents suggests that this is mainly due to Brexit uncertainty, with other firms citing cost pressures and investment cycles maturing after a period of elevated capital spending in these areas.
“Super Thursday” saw the Bank of England’s MPC vote unanimously (9-0) to increase rates by 25 basis points to 0.75% in August. The decision to hike rates was in line with the CBI’s and consensus expectations. The MPC’s decision was supported by UK economic activity regaining some of its momentum in Q2 after a weak Q1 (due to the poor weather), consistent with the MPC’s forecasts in May. The Committee also have their eye on the tightness in the UK labour market, and the potential for this to push up wage pressures going forward.
The MPC’s guidance on the future path of rate rises remained unchanged: an ongoing tightening in monetary policy will be necessary to return inflation to target, assuming that the economy evolves in line with the MPC’s forecast. Crucially, this is because the Bank expect the UK economy to continue growing above its “potential” rate (the rate of growth consistent with stable inflation). They believe that even the tepid growth that they expect is enough to push inflation above the MPC’s 2% target – hence the need for further rate rises ahead.
Wheat Genome: Scientists have unlocked the genetic code of bread wheat, a breakthrough that could result in more consistent dough and longer shelf lives for baked goods.
More than 200 scientists from 73 research institutions in 20 countries have worked to produce a detailed description of the genome – the genetic make-up – of bread wheat variety Chinese Spring.
Sequencing the wheat genome had previously been thought impossible due to its size and complexity – it is five times larger than the human genome.
Published in the journal Science last week by the International Wheat Genome Sequencing Consortium (IWGSC), the work is described as the highest-quality genome sequence yet produced for wheat. Scientists have said it will pave the way for production of wheat varieties better adapted to climate challenges, with higher yields, enhanced nutritional quality and improved sustainability.
Having the full sequence can have a major impact on crop breeding and improvement in a relatively short period of time, according to Sarah Thornber, agriculture section manager at consultants Campden BRI.
“Desired traits can include flowering time, disease resistance, yield, flavour, drought resistance and frost resistance. Resistance to drought and other climate-related phenomena is a key area of research, so this could help ensure harvests are more consistent and allow wheat to be grown in areas that are currently unsuitable,” she told British Baker.
For bakers, greater understanding of the wheat genome may, over the coming decades, enable suppliers to develop wheat varieties better suited to consistent dough production, explained Thornber’s colleague, Campden BRI rheology and texture manager Sarab Sahi.
“Bakers would like to see stable and assured performance from their flour from one harvest to the next, so that the recipe formulation and mixing requirements are unchanged,” he said.”
This is an excerpt of an article produced by British Baker magazine. To read the rest of the article, visit britishbaker.co.uk
Brexit Update: On Thursday it is expected the Government will publish the first of around 70 ‘technical notices’ that are expected to be published between now and the end of September as part of the Governments preparations for a ‘no deal’ Brexit. The notices will include advice for businesses, citizens and public bodies. Dominic Raab Brexit Secretary will make a speech about planning for ‘no deal’ also on Thursday.
Brexit: As the UK’s exit from the EU fast approaches, FDF’s one day event on Future Regulation and Food Safety taking place on 17 October will cover everything you need to know about the future UK regulatory landscape for food and drink. Book your place here
Brexit: Home Office EU Settlement Scheme Briefing at FDF Offices
The FDF-Home Office briefing session on the EU Settlement Scheme will be taking place on Monday 3 September, 14:00-16:00 at FDF’s offices.
EU Settlement is the scheme that will provide EU nationals (who were in the UK before 21 December 2020) with Settled Status. The aim of this briefing, led by the Home Office’s EU-Exit Immigration Policy Stakeholder Engagement Lead Hilary Bagshaw, is to provide companies with the knowledge and tools to best guide the EU nationals they employ to apply for Settled Status, so they can remain in the UK and continue making a valuable contribution to our sector. Topics covered will include: what support companies can legally provide to their EU nationals and what they can’t; Pre-Settled Status to Settled Status transition; and compliance issues (when will companies need to be compliant, will there be a leeway period, and what will the penalties be).
If you would like to attend, please register your interest here. This is a free event and places are limited, therefore we encourage you to register your interest as soon as possible to avoid disappointment.
Summary of Responses to Defra’s Agri-Food Consultation Published: Defra’s 10-week consultation on the future of food, farming and the environment post-Brexit was launched on the 21 February and closed on 8 May, and this week announced a summary of the responses received. The Consultation set out the Defra Secretary Michael Gove’s vision for farmers and landowners to receive subsidies based on environmental enhancement and sustainable production. Defra received 43,356 responses and 127,183 signatures across three petitions. Defra said all responses have been read and analysed, and a report will be published within this Parliamentary session. It is widely expected that this consultation will feed in significantly into what will be the government’s post-Brexit Agriculture Bill.
Wheat Usage: Attached is the final month of AHDB (previously the Defra survey) miller wheat usage figures for 2017-18:
AHDB Miller Wheat Usage Survey 2018-06
Some key points are:
