19 January 2018
Spain and Luxembourg joined Italy this week in their calls for a comprehensive trade agreement with the departing United Kingdom while economic forecasters warned that Europe could take a huge hit if German and French stubbornness prevails; midsized business gave a vote of confidence to global Britain with a plurality favouring a clean break from the EU; and sterling enjoyed a sustained rise in the currency markets, against the predictions of Goldman Sachs.
Prospects of a generous Brexit deal have increased this week as more EU countries begin to stand up to Germany and France and oppose their plot for a punitive resolution. Spain is among the latest to come out in favour of a good deal, with Madrid calling for a minimum tariffs agreement following a meeting with the Dutch. Spain has previously been a prickly partner due to disputes over the governance of Gibraltar, but economy minister Luis de Guindos called for a Brexit deal “that keeps Britain as close to the EU as possible”. It follows a similar intervention from Italy last week, with that administration demanding a so-called “Canada Plus Plus Plus” deal for Britain.
Luxembourg joined the chorus too, calling for a deal that keeps markets in both goods and services as open as possible. Xavier Battel, the prime minister of Luxembourg, said that “most would be happy to stick as close as possible to the current status quo”.
It’s no surprise that European nations are waking up to the importance of maintaining close economic ties to Britain. New research from Professor Patrick Minford suggests that Britain could benefit massively from a no-deal scenario – profiting by £640bn according to his estimates – while the European Union could lose half a trillion pounds. The Cardiff University professor said that “it could not be more open and shut who least wants a breakdown”.
He is not alone in his gloomy predictions for the European mainland should German and French stubbornness win out. Oxford Economics this week agreed that a hard Brexit would hit Europe with a crippling economic blow, but put their estimate at a £100bn cost.
And a trade deal is the preferred route out of the EU for a plurality of midsized companies in Britain too, with a new poll revealing that 22% of those surveyed want a Canada style arrangement while a further 19 back reverting to WTO rules. 6% more preferred another option – perhaps the enhanced “Canada Plus Plus Plus” deal that increasingly appears to be on the table. Less than a quarter of those polled wanted to remain in the single market and only 6% wanted to stay in the customs union. Yet more evidence that ordinary businesspeople in Britain believe in a prosperous future outside of the European Union.
Meanwhile sterling has rallied this week, hitting a post-referendum high of $1.37 against the dollar at the weekend, continuing upwards to $1.39 throughout the week. It comes after a long period of sustained expansion in manufacturing owing to the increased competitiveness of British produce on the global markets – due in part to the devaluation of sterling following the 2016 referendum. But sterling is on the way back up; having delivered benefits to the economy, it is now appreciating and disrupting possible inflationary consequences. This is in contrast to the forecasts of Goldman Sachs – who recently suffered their first quarterly loss in seven years – which has predicted sterling would fall even further to $1.14 by the end of 2017.
12 January 2018
UK manufacturing boomed in December with the sector expanding at its fastest rate in a decade and enjoying its longest period of growth in 20 years – the figures promoted the NIESR to boost its 2017 growth forecasts to 1.8%; 36 countries have agreed to sign free trade deals with the UK on Brexit Day in 2019; and EU politicians start waking up to their need for a comprehensive trade deal with the UK as a new report from Deloitte warns that the German car industry would be crippled by a hard Brexit.
For the first time in 20 years British manufacturing has enjoyed a seventh consecutive month of growth, expanding at its fastest rate for a decade. The new figures from the Office for National Statistics reveals a 0.4% expansion in output and an estimated 3.9% year-on-year increase in the three months to November. The figures defy the pessimistic guesswork peddled by Remainers in the run-up to our referendum.
The National Institute of Economic and Social Research has also revised its own figures for growth in the final quarter of 2017 following the release of the manufacturing data. They had previously predicted economic expansion of only 0.5% but have increased that figure to 0.6%, bringing their estimate for annual growth to 1.8%. A far cry from the claims of recession and economic apocalypse that were spewed by the Project Fear campaign.
Former international trade minister Lord Price has revealed that 36 countries are prepared to sign free trade agreements with the United Kingdom following our successful withdrawal from the European Union, highlighting the success of Liam Fox’s efforts to turbocharge UK trade policy as we withdraw from the dysfunctional European customs union. It will enable the UK to continue existing trading relations with third parties as soon as we leave the EU, with many of those nations expressing an interest in hashing out fresh trade deals with the UK once we’re free to negotiate.
Britain is prepared to do just well outside of the EU, even if we don’t score a free trade deal. Freed from the commercial interests and protectionism of 27 other EU countries, we can pursue an ambitious independent trade policy designed for British firms. But the EU can’t walk away from a deal quite so easily. A new report reveals that German car manufacturers alone could lose £3.4bn a year and shed 14,000 jobs if Brussels resists a good deal. The report, put together by Deloitte, showed that more than 42,000 jobs in the sector are linked to British trade and that a loss of access to the lucrative British market could take 5% off of the sector. “A hard Brexit would cause sales of German suppliers to shrink” said Dr Alexander Borsch. We’ve been warning them all along!
It’s no wonder that Europeans are now waking up to the importance of hashing out a generous Brexit deal, with Italian Economic Development Minister Carlo Calenda calling for Britain to be given a “Canada Plus Plus Plus” deal – dubbing it “the minimum that we need to achieve”.
15 December 2017
This week new data from the NIRSR showed Britain outperforming expectations as pay growth picked up and new evidence showed that the importance of EU workers in the tech sector is massively overblown; the UK was shown to be the top developed economy for the establishment of new businesses last year while our ties with China and Japan only got stronger; and British retail was shown to have surged in October and November contrary to early reports, showing that the inflation rate is yet to hit British consumers.
New data from the National Institute of Economic and Social Research suggests that the British economy grew by 0.5% in the three months to November, beating the forecasts of professional economists. Part of the growth is likely down to export activity, with HMRC data showing exports from England from England rising by 14% and exports from Scotland soaring by nearly 20%. This echoes the findings of ONS data which showed industrial output up 1.2% in the three months to October, likely caused by the more competitive exchange rate according to Amit Kara of the NIESR.
As the economy continues to expand following our vote for Brexit, pay growth is on the up too with annual wage growth hitting 2.5% in the three months to October according to official figures. That’s from a previous rise of 2.2%. It shows pressure on wages relaxing as inflation rose only marginally to 3.1%. “We are approaching the point at which the pool of available labour is beginning to become rather small, and I think there is a sense many companies are finding retention problems” said Peter Dixon at Commerzbank. “Accordingly they are going to have to nudge up wage offerings in order to ensure they can maintain their staff, which is important particularly in skills and services-oriented economy.” A pay rise for British workers after Brexit? Finally!
As the labour market is transformed by a long-awaited end to EU open borders, don’t expect a serious skills shortage to develop though. The UK is less reliant on EU workers than many Remainers would like to believe with a new study showing that more tech workers have arrived from India, Australia and the US than from major European Union member states. Government-backed Tech City showed that the British tech sector looks far beyond the confines of the single market for their talent, with English-speaking US and Australia accounting for a whopping 17% of all tech workers arriving in the UK.
New figures have also shown Brexit Britain dominating international competition when it comes to the volume of new businesses established in the country last year. Accounting firm UHY Hacker Young compiled the data, showing the number of businesses in the UK growing by 6% to 218,000 last year. The other major developed economies grew on average by only 2% according to the measure. Only rapidly growing players China, Pakistan, Vietnam, Malta, and India outperformed the UK. “As a range of new sources of funding gain traction in the market and the corporation tax burden lightens, the start-up climate is improving, financial pressures are easing and investment for growth is on the cards” said Daniel Hutson from UHY Hacker Young.
Even Remoaner Hammond is at least looking ahead to some global opportunities for Brexit Britain, even if he’s been pushing in the cabinet for a watered-down fake Brexit which would prevent us from striking trade agreements globally. He’s set to seal $1.3bn worth of trade and investment deals with China during a two-day trip to the rising power. He’ll be taking Mark Carney, LSE CEO Nikhil Rathi, and Business Secretary Greg Clark – underlining the gravity of the event.
And our ties with the East are likely to be improved further by an eager Japan. Yesterday Boris Johnson and Japanese Foreign Minister Taro Kono met and Boris’ Japanese counterpart confirmed that they were seeking a rapid agreement on mutual recognition of standards – one of the few roadblocks to genuinely frictionless trade that Brexit sceptics have often heralded as a key reason for a soft Brexit. The agreements, however, are significantly less difficult to strike than many suspect – and our dealings with Japan may well prove that very shortly. “We believe in terms of mutual recognition, as Taro has just said, we believe that can be readily and speedily accomplished” said Mr Johnson.
British retail is surging too with sales rebounding in November as sales volumes rose by 1.6% on numbers for November 2016. With inflation running slightly above the Bank of England’s target, the rise in volume shows that the inflation rate isn’t hurting British consumers – contrary to the belief of many pitiful Remainer commentators. The new data also showed that an alleged drop in sales in October didn’t actually happen as sales in fact held firm. Andrew Sentence of PwC said that “consumer confidence seems to have recovered from the shocks which hit retail spending earlier this year – rising inflation and increased uncertainty surrounding the Brexit process”. So much for that economic collapse that Project Fear predicted.
8 December 2017
This week the ONS revealed that FDI had surged last year while the UK enjoyed new investment from the biotech sector and digital giant Facebook; and new PMI data showed the UK manufacturing sector surging at its fastest pace in four years with growth across the entire sector and employment on the up.
Official stats released last Friday show Britain enjoying its highest ever net flow of FDI (foreign direct investment) in the year we voted to quit the EU – a sign of confidence from global investors.
The Office for National Statistics revealed that net flows stood at £145.6bn – up from £25.3bn a year prior – with much of the boost coming through equity capital. “Large publicly reported transactions in 2016 included the acquisitions of SABMiller, ARM Holdings and BG Group” reported the ONS.
And the investment doesn’t seem to be stalling. Just this week we discovered that a major US life sciences investment fund is set to plough $1bn into the UK’s booming biotech sector, with the investor planning to move sizable portions of its operations to Britain.
Meanwhile in the tech sector Facebook has opened a new London HQ, creating 800 jobs and confirming that the sectors of the future are still drawn to an independence United Kingdom. “The UK’s flourishing entrepreneurial ecosystem and international reputation for engineering excellences makes it one of the best places in the world to build a tech company” said EMEA VP Nichola Mendelsohn. “And we’ve built our company here – this country has been a huge part of Facebook’s story over the past decade, and I look forward to continuing our work to achieve our mission of bringing the world closer together”.
IHS Markit’s monthly survey of British manufacturing has shown the sector going from strength to strength as Brexit talks move forward, with the Purchasing Managers Index – one of the most reputable measures of private sector activity – showing a rise from 56.6 in October to 58.2 last month. The acceleration sees every part of the sector in good health, with the director of Markit Rob Dobson saying that the sector had “shifted up a gear in November, with growth of output, new orders and employment all gathering pace”.
No wonder factories have gone on a hiring spree, with the survey showing employment in the sector at 55.4 – the fastest rate of expansion since June 2014. So much for that Brexit-induced economic apocalypse! Figures across the survey were at their strongest since 2013, proving that our vote to leave the EU has breathed new life into the economy.
24 November 2017
The Bank of England turned uncharacteristically pro-Brexit – not to mention factual – in its appraisal of rapidly declining unemployment, which the Bank expects to apply much-need upward pressure on wages. A key reason behind the re-balancing of the British Labour market? reduced immigration of course. And while the commentariat sought to frighten everyone with subjective productivity data, Swiss banking giant UBS revised its forecasts upwards – and in case anyone failed to notice, the OBR’s downward UK growth visions were marginal. Car manufacturing is up and on track for a remarkable record by the end of the decade, exporters are bursting with optimism, while tourists are falling over one another to reach the UK.
The big boffins at the Bank of England have concluded that fading fears over Brexit combined with restored confidence first lost during the financial crisis and increasingly flexible work patterns are bringing Britain close to full employment, a knock-on effect of which will be rising wages.
Joblessness in the UK has dropped to 4.3%, the lowest in almost half a century.
Gertjan Vlieghe of the Bank’s monetary policy committee spoke before the Treasury Select Committee, citing an accelerated decrease in the number of part-timers seeking fulltime work and jobseekers indicating that Britain is reaching full real employment, putting pressure on firms to raise wages, and that’s even before you consider the benefits of a controlled immigration policy.
“I would also highlight the slowdown of inflows of foreign workers into the UK which may make pay growth here perhaps more sensitive to the tightening in domestic conditions than it has been previously,” said Michael Saunders, another member of the MPC.
At the end of a budget week when everyone and their dog suddenly qualified as an expert in productivity (an extremely inexact indicator) it is important to not lose sight of the fact that ours is a strong and strengthening economy. Step forward, Swiss banking Giant UBS, which upgraded its UK growth forecasts by 0.4%. At 1.1% however, it is still short of the Office for Budget Responsibility’s 1.4% and the Bank of England’s 1.6%.
Car exports rose 5% in October as demand for British-made cars soars following the pound’s historic devaluation at the referendum.
1.72 million cars were made in the UK last year, a 17-year high. 1.73m are expected to be built this year. The thriving sector remains on course to beat the record of 1.92 million vehicles by the end of the decade.
A fascinating survey of UK businesses by American Express reveals booming optimism among British business. Just under half (44%) are refusing to heed the warnings of doom mongers and say they expect revenues to increase next year as a result of better opportunities abroad. Half said they are looking to trade with new countries over the coming year.
With President Trump and his Commerce Secretary Wilbur Ross signalling their full intention to deepen trade with the UK, it is no surprise to see the US top the list of underexplored trading opportunities.
There was a time when the world was a march larger place and it made, at least some, sense to be locked into a regional trade bloc. Not any more though so it’s no surprise to see British businesses project their export strategies well beyond the North East Atlantic – a sensational 91% of respondents agreed that the emergence of new technologies would make international trade easier. No surprise then that 80% declared confidence in their international strategies.
Many businesses still said they would remain predominantly focused on selling into the EU, belying Establishment dogma that it will be impossible to sell into Europe in the event of a no deal.
£2.8bn, that how much lovers of all things great and British visited the UK spent in August, the highest splurge in a single month, ever. Europe, the US and increasingly, China dominate hoards of tourists coming over. And while the luxury goods available in smart London stores remain a huge attraction, the countryside is enjoying a well-deserved resurgence – Hotels in the Lake District experience double-digit rises in bookings in July.
“We are confident of a strong festive season and beyond as we showcase why our nations and regions should top people’s list as the must-go-now destination”, said VisitBritain director, Patricia Yates. What was that about Britain closing itself off from the world?
17 November 2017
This week Jacob Rees-Mogg hailed huge opportunities for Britain to benefit massively from a clean Brexit while industrial output soared, growth touched every part of the country, Michael Bloomberg admitted that London will continue its dominance post-Brexit, and revenues were shown to have risen for the UK’s biggest 350 firms.
Legendary Brexiteer Jacob Rees-Mogg has been leading the charge for free trade this week as he promoted a new report from the pro-Brexit Economists for Free Trade Group. The group estimates that the UK could benefit by billions every year with the introduction of an ambitious budget plan that allowed the UK to seize the big opportunities of independence from Brussels. Mogg attacked Chancellor Philip Hammond for his mad pessimism over Brexit, while calling for a budget that pursues free trade, reduces red tape, and cuts taxes. “The window of post-Brexit freedom will remain firmly shut to those forecasters who subscribe to the modelling approach adopted by HM Treasury, which has a neo-protectionist approach and an inbuilt bias towards a pessimistic assement of Brexit” said Mogg.
New ONS figures showed a surge in industrial output in the month of September, with production up 0.7% on August. Manufacturing output also rose by 0.7% in the same month, showing healthy economic performance across the sector. Machinery and equipment formed the bulk of the increase as the UK’s trade deficit narrowed faster than predicted by economic forecasters – a £0.7bn reduction, down to £2.75bn in September. The continued growth in output is impressive, with Samuel Tombs of Pantheon Macroeconomics reminding commentators that “industrial production has risen for six consecutive months, a feat last achieved 23 years ago”.
Signs of strong growth were confirmed by the Lloyds purchasing managers index survey of manufacturing and services. They showed growth in every corner of the country, and acceleration in all regions but three. Wales proved to be the biggest powerhouse region with a score of 58.6, where every figure over 50 represents growth. Growth in London hit a six-month high too, with a reading of 56.3 in October – up from 54.1 a month before. No wonder even top Remoaner Michael Bloomberg has done an embarrassing U-turn and admitted that London will remain the dominant financial player in Europe. “It has the things the finance industry needs: it is English speaking, it is family-friendly”. As we’ve been saying all along!
And a new study by Share Centre has showing stunning rises in revenues for the UK’s biggest companies. Revenues soared by 17.3% to £113.1bn over the last year, along with a 77.1% rise in operating profit. Much of the growth has been credited to the revaluation of sterling that followed our vote to leave the failing European Union – an event that made British goods more competitive on the global market.