The Bank of England has published its Q2 Agents’ Summary of Business Conditions, the link to which is below with a short overview.
https://www.bankofengland.co.uk/agents-summary/2021/2021-q2
Overview
This publication summarises intelligence gathered by the Bank’s Agents between mid-April and early June. The Agents’ scores published alongside this document are based on information gathered between mid-April and late May, and they generally represent activity over the past three months compared with a year ago. During the early stages of the pandemic in 2020, economic activity fell at an unprecedented pace, reflected in some Agents’ scores moving to the low extremes of their range, where scores can be consistent with a wide range of quantitative outcomes. More recently, economic activity has recovered as social distancing restrictions have been lifted. Because most of the Agents’ scores compare the past three months with a year ago – when restrictions meant activity was at very low levels – this has resulted in a sharp rebound in some of the scores to the upper extremes of their range.
Barclays Economic Update:
UK Flash Composite Output Index Decreased to 61.7 in Jun’21
According to data published by HIS MARKIT/CIPS, UK flash composite output index decreased to 61.7 in jun’21 from 62.9 in May’21. Despite the marginal decrease in the index, output across the UK private sector recorded its strongest growth since jan’98. Output growth was recorded across the manufacturing and service sectors as the economy continued to reopen post lockdown.
The seasonally adjusted UK flash manufacturing purchasing managers’ index (PMI) decreased to 64.2 in jun’21 from 65.6 in May’21. Significant growth was reported in output and new orders in jun’21, however, new orders increased at a rate less than may’21. Manufacturing production was restricted to some extent in jun’21 due to supply-chain disruption.
The seasonally adjusted flash UK services business activity index decreased from 61.7 in jun’21 from 62.9 in May’21. Despite the decrease in the index, significant expansion was recorded in the service sector activity, driven by the easing of covid-19 restrictions and growing demand.
The UK Government Have Launched Negotiations with £9tn Pacific Free Trade Area
The UK government have launched negotiations with the pacific free trade area worth £9tn to join the comprehensive and progressive agreement for trans-pacific partnership (CPTPP). As a member of CPTPP Britain is expected to establish trade relations with a number of economies across Asia-Pacific and the Americas.
The membership is also expected to lower tariffs on key British exports like cars and whisky and is expected to bring tariff-free trade for 99.9% of its exports. Further, UK exports to CPTPP countries are anticipated to increase by 65% to £37bn by 2030.
The membership is also expected to boost economic growth and support British jobs. The membership benefits are expected to increase over time, with the Philippines, Thailand, Taiwan and the Republic of Korea all having expressed interest in joining the CPTPP.
UK Food and Drink Exports to the EU Decreased by 47% in q1’21
According to the q1’21 trade snapshot released by the Food and Drink Federation (FDF), UK food and drink exports to the EU decreased by 47% in q1’21 compared to q1’20. The downturn was due to the on-going impacts of covid-19 and changes in the UK’s trading relationships with the European Union (EU).
The data indicated that food and drinks exports to the EU decreased by £2bn in q1’21, compared to q1’20. Exports declined in nearly all EU member states. Exports to Ireland decreased by more than two-third in q1’21, while exports to Germany, Spain and Italy have declined by more than 50% since q1’20.
The data also highlighted that exports to non-EU countries accounted for 55% of all UK food and drink exports. Significant growth in exports to East Asia was reported in q1’21, due to increasing demand for UK food and drink. Exports to China increased by 28.2% in q1’21, while exports to Hong Kong increased by 3.7%, Japan by 6.2% and South Korea by 18.5%.
Dominic Goudie, head of international trade at the FDF, stated that the loss of £2bn of exports to the EU is an indication of the scale of losses that UK manufacturers are expected to face in the longer-term due to new trade barriers with the EU.
Fortification of flour with folic acid
Lord Dodds of Duncairn asked Her Majesty’s Government what progress they have made with the response to their consultation about the fortification of flour with folic acid. The Minister, Lord Bethell, responded that “the administration of folic acid to the bread of the nation to avoid around 500 neural tube defects a year is exactly the sort of preventative health intervention that we are putting at the heart of our health strategy. I am pleased to say that progress is being made, and I thank the devolved Administrations for their engagement in this measure to ensure that we have alignment between the four nations. I reassure noble Lords that this remains a priority for the Government.” Various members then put further questions to the Government on the perceived delay in implementing any measures.
Appointments to Trade and Agriculture Commission (TAC): call for expressions of interest
DIT are seeking expressions of interest to fill up to 12 roles in the Trade and Agriculture Commission. Expertise is required in at least one of the following areas: UK animal and plant health standards; UK animal welfare standards; UK environmental standards as they relate to agricultural products; international trade law and policy. The closing date is 4 July 2021. See more here
Moving Goods Trader Showcase migration
The online Trader Showcase site that you’ve been using to find out about the new rules for moving goods to Northern Ireland and exporting to the EU has been migrated to two new locations, which you can access by using the links below:
Moving goods from Great Britain to Northern Ireland
Exporting goods from Great Britain to the European Union
The new Trader Showcase has been developed using Dropbox Paper, which usually requires users to have an account to access content. We recommend opening a free account – which involves a basic registration process – if you don’t already have one.
The new Trader Showcase site works with most modern browsers, but is best viewed using Chrome, Firefox, Safari and the latest two versions of Edge.
Government confirm HFSS advertising restrictions
The Government has now published the outcome of consultations to further restrict the advertising of products high in fat salt and sugar (HFSS). It confirms the planned 9pm watershed on HFSS TV advertising alongside a total internet ban for paid for HFSS advertising, both of which will come into force in the UK on 1 January 2023.
The internet restrictions will NOT apply to company owned media such as blogs, company websites and social media pages. Brand advertising is also out of scope and small businesses (under 250 employees) are exempt. Within the online restrictions there are also exemptions for business to business advertising and transactional content.
As outlined in the original proposals, Government has maintained that products in scope are those that are form part of the PHE calorie and sugar reduction programmes or are drinks that pay the soft drinks levy. This mirrors the categories in the HFSS promotional restrictions policy, but in addition, will include out of home categories for main meals, starters, side meals, children’s meals and desserts. The 2004/5 nutrient profiling model will be applied to the categories in scope to define what is a HFSS product.
(NB: The nutrient profiling model was reviewed in 2018 but PHE has recently confirmed it is unable to provide an update on the timelines for publication of the new model. The decision is dependent on DHSC.) .
Update on Labour/ Driver Shortages
The FDF has continued to make representations to the Government concerning ongoing issues with driver shortages. To ensure that messages are amplified without being unnecessarily duplicated, the FDF is working alongside the Trade Associations Roundtable, the IGD, the participating members of the F4 (the FDF with the BRC, UKH and the NFU), as well as coordinating closely with the Road Haulier Association. Our main observations and recommendations to Government include the continuing distorting effect of furlough (although this is a delicate argument to make given our previous calls for furlough to be extended), the need to attract EU workers back to the UK and ways that working visa restrictions can be eased, and the urgent need to train new drivers and the impact of IR35.
Voluntary reformulation could be more effective than Government data suggests
A recent study, has shown a more positive image of industry’s progress towards Public Health England’s (PHE) sugar reduction targets. Published in the Plos Medical Journal, the study aimed to use and alternative and more comprehensive data set to analyse changes in the sugar content of foods covered by PHE’s sugar reduction from 2015-2018. Although the study included only five categories (breakfast cereals, yogurts, biscuits and cereal bars, chocolate confectionery and sugar confectionery) they found 5.2% decrease in sales-weighted mean sugar content of these categories.
The data followed a similar pattern to PHE’s analysis, with greatest reductions seen in yoghurts and breakfast cereals and smaller reductions seen in chocolate and sugar confectionery, but with greater percentage reductions seen for each category in comparison. The differences between the Government data and the study is attributed to the source of the data – sales data from Euromonitor and nutrient composition data – and the fact that only 5 categories were analysed.
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