Friday 19 July 2019
With inflation steady at the target 2% British workers are enjoying an uninterrupted period of wage growth. Meanwhile, as ever it seems, unemployment continues to fall, reaching its lowest rate in almost half a century. SMEs are preparing for No Deal Brexit, which the CEO of Aston Martin welcomes. The housing sector is enjoying good growth, as is the economy as a whole.
New figures from the Office of National Statistics reveal employment is at its healthiest in 45 years. Employment was up by 28,000 in the three months to May, growing to 32.75m, another record high. Unemployment fell by 51,000 to just 1.29 million during the same period, holding steady at 3.8%. Contrast that with the rate in France under Emmanuel Macron, an alarming 8.8%. The good news doesn’t stop there. Wage growth has been impressive, basic pay is up 3.6% and total earnings, including bonuses, are up 3.4%, the highest rate in over a decade and well above inflation, currently at 2%, meaning significant growth in real wages…
…The ONS also reports consecutive months of rising real earnings dating back to March 2018. “Regular pay is growing at its fastest for nearly 11 years in cash terms, and its quickest for over three years after taking account of inflation,” said head of labour market statistics, Matt Hughes.
… Should we be surprised? The diminishing rate of immigration is relieving downward pressure on wages. We see this in the construction sector. Recruiters Ranstad say average pay increased by an impressive £3,600 in 2018, reaching £45,900. “Our research shows that construction workers from overseas are being put off coming to the UK and those that are here are thinking about moving elsewhere,” said managing director, Owen Goodhead…
…The outlook for construction as a whole looks rosy too. Housebuilder Barratt is set to record pre-tax profits of £910m over the year running to 30 June 2019, a considerable increase of £85m on the previous year. Barratt competitor Bovis is also on the up, experiencing high demand for its homes. Bovis built 1,647 homes in the year running from 30 June 2018, compared to 1,580 over the previous period. The average selling price is also 3% higher at £270,000.
Having recently opened a brand new manufacturing facility in South Wales in order to double its production numbers Aston Martin is ready for No Deal Brexit. We have “modelled No Deal and run the scenarios”, said CEO Andy Palmer, adding, “I’d rather leave with No Deal than drag negotiations on… Every time we have to prepare to leave it ties up working capital and brains on something that may or may not happen… at this stage a decision is better than no decision.” Palmer also offered a businessman’s appraisal of the British government’s handling of the negotiations. “The EU27 have worked with consensus and executed their negotiations brilliantly. Our Brexit strategy has been laughable.” Aston Martin’s first ever sports utility vehicle, the DBX will be manufactured at the new site in St Ahan, creating 3,000 new jobs.
The “end the uncertainty” sentiment is shared with 59% of Scottish small businesses surveyed by Citibase who said they do not think the Article 50 extension will result in a better deal. Just under half say they are prepared for No Deal Brexit. Meanwhile, the number of firms that have seen their revenues increase or stay the same since the referendum has climbed from 52% to 57%. However, only 16% pf Scotland’s SMEs say the government has provided enough support. Boris Johnson’s plan to introduce a massive public information campaign to assist businesses as much as possible as they prepare for No Deal is more necessary than ever.
Britain’s trading relationship with Ireland is going from strength to strength, but as the weaker partner, it is the Republic that needs to think more carefully about the consequences of a No Deal Brexit. British exports are outpacing Irish imports, exhibiting 12% growth in the total value (€8.2bn) of goods bound for Ireland over the first five months of 2019 compared to the same period in 2018. British imports from across the Irish sea have grown 9% (€6bn).
Wetherspoons boss, Brexiteer Tim Martin is ready to break free from the EU and has shown as much in his business’s recent figures. In a trading update, the company said that like-for-like sales had increased by 6.9%, while total sales were up 6.6% over the ten weeks to July 7. Wetherspoons has opened 5 new pubs this year alone, and now has more than 900 pubs in Britain and Ireland. Martin hit out at how the risks of a no-deal Brexit had been “portrayed in the media, politics and business”, pointing to the arrangements made “to replace French champagne and brandy and German beer with alternatives from the UK, Australia and America.”
Fears of a recession following low growth numbers in March and April, it turns out, were typically exaggerated. According to the ONS, economic growth in May was a very respectable 0.3%, a reversal of April’s 0.4% dip, meanwhile the growth rate for March has been revised upwards, from -0.1% to +0.1%. “UK GDP growth remains choppy from month to month as a result of volatility either side of the original Brexit date of 29 March, but the underlying picture is one of continued modest growth in the economy,” said PwC chief economist John Hawksworth.