Economic News

CBI: Latest Economic Update – October 2018:

• CBI surveys suggest that warmer weather has boosted growth over Q3, however these effects are likely to be temporary and are expected to unwind towards the end of the 2018
• The underlying UK growth picture remains subdued, with conditions for consumer-facing firms remaining particularly challenging due to the ongoing squeeze on household incomes. In contrast, the strength in the global economy is expected to continue supporting manufacturing export growth
• CPI inflation edged higher in August, contrasting with consensus expectations of a slight fall.
• The UK economy grew by 0.4% in Q2 2018, according to the ONS’ second estimate of GDP. This was unrevised from the first estimate released last month.

 

Brexit Update

Barclays Alternative Brexit Scenario: A No-deal Rate Cut

We propose an alternative scenario to our central Brexit assumption, whereby the UK leaves the EU in mar’19 without a Withdrawal Agreement and abruptly – albeit in an orderly fashion – reverts to WTO rules. In this scenario, we assume economic disruption would mostly be avoided due to an ‘implementation period’ of several months, during which legal protocols would be put in place, enabling a continuation of cross-border trade, travel, and transactions.

 

In this scenario, we see inflation jumping swiftly to 3.5%, boosted by currency depreciation (0.5pp), but mostly by the re-establishment of import tariffs (at least 1pp). We would expect a fall in headline growth of close to zero, pushing unemployment back above 6% by 2020. Note that these estimates merely assume that long-term losses are front-loaded; we do not factor in non-linear or confidence effects that could result from economic disruptions, an asset price crash, or political crises. Accordingly, these estimates are subject to considerable uncertainty.

 

We argue that since the referendum in 2016, businesses have begun to prepare for the prospect of the UK leaving the EU, though not necessarily the abrupt deterioration in business conditions that may result from a no-deal outcome. While the impact on inflation is straightforward (FX channel and WTO tariffs), the calibration of the impact on expenditure breakdown is less obvious and we use our original Brexit scenario, recalibrated and corrected for adjustments already implemented.

 

The BoE would face a similar trade-off as in 2016, and we argue it would resolve it by cutting rates by 50bp. We believe the spike in inflation is likely to be short-lived (pure base effect) while the drag on growth is more protracted. In our no-deal scenario, the absence of financial disruption and economic recession limits the scope to deploy additional easing policies (capital buffers, QE, liquidity operations). The same holds for fiscal policy, which may react to only a minimal degree (suspension of structural consolidation, automatic stabilisers allowed to kick in) and with a delay. We see net borrowing rising from 2.0% of GDP in 2018 to 2.9% in 2020.

 

The Benefits of Establishing a Coherent UK Immigration Policy:

According to a report titled as Open and Controlled – A New Approach to Migration published by CBI, most credible economic studies show that immigration delivers economic benefits to the UK essentially, foreign workers put in more money than they take out. As the Office for Budget Responsibility notes, higher net migration also reduces pressure on government debt.

 

For nearly half a century, free movement has enabled businesses to draw on the talent, skills and labour of over 500 million people, the information collated shows that businesses require a combination of skill levels and that these are inter-connected through complex supply chains, this means it is essential to get policy on immigration right.

 

The study even suggests that EU workers currently make up between 4.0% and 30.0% of the total workforce in different sectors. Recent statistics from the Office for National Statistics also reported that 11.0% of the UK’s manufacturing workforce were EU nationals, this equating to more than one in 10. As the UK prepares to leave the European Union next March, businesses will face momentous changes. The UK and EU must work together to enable both parties access to all levels of labour, and a policy which is mutually beneficial.

 

Other News

NEW: Campden BRI’s Pick ‘n’ Mix Regulatory Training heading to Ireland: Early in 2019 our experts in EU Harmonised Legislation will be offering a programme of courses designed to suit the needs of the Food and Drink Industry.

This first-of-its-kind programme will allow delegates to have flexible access to trainers and materials over a series of consecutive days at a convenient, centrally located venue in Ireland. If you need staff bringing up to date on aspects of labelling, nutrition and health claims, additive permissions, flavouring use, watch this space for further details, or for further information send an email to: foodlaw@campdenbri.co.uk

 

Newspaper Articles: I just thought it was interesting that these two articles appeared on the same day:

The Times – Eat cake to avoid malnutrition, GPs tell older patients

Daily Mirror – School installs pedals under pupils’ desks to help obese children lose weight

 

The European Commission announced on 19 September 2018 registration of a European Citizens’ Initiative entitled ‘Eat ORIGINal! Unmask your food’ on 2 October 2018.

The aim of the initiative is to impose mandatory declarations of origin for all food products in order to prevent fraud, protect public health and guarantee consumers’ right to information. Once registered, there will be a one-year process of collection of signatures in support of the initiative and if this achieves one million statements of support, from at least seven different Member States, the Commission will have three months in which to react.

 

Clinical Research:

https://academic.oup.com/ajcn/advance-article-abstract/doi/10.1093/ajcn/nqy169/5106980?redirectedFrom=fulltext

Diets rich in whole grains increase betainized compounds associated with glucose metabolism.

The European Commission has published a draft regulation on trans fats, which sets out a legal maximum limit of 2g industrially produced trans-fat per 100g of fat. The draft Regulation is open for comments until 1 November.