QES Results: Balances dip as growth slows

• The BCC’s economic survey for Q3 2015 signals moderate economic growth over the next year.
• Overall the results are disappointing as most key balances for both manufacturing and services were down on the previous quarter, although service sector balances dipped only slightly.
• Manufacturing balances are significantly weaker than for services. Notably, the manufacturing export sales balance reached a six year low.

The British Chambers of Commerce (BCC) Quarterly Economic Survey (QES) – Britain’s largest and most authoritative private sector business survey, based on almost 7,500 responses from firms, employing around 800,000 people – shows that Britain’s two-tier growth trend continues. While both manufacturing and service balances were generally weaker this quarter, manufacturing balances declined to a much larger extent than in services.

Most key national balances for the service sector dipped slightly on the previous quarter, although the balance for domestic sales recorded a healthy improvement. Overall, service sector balances remain relatively strong, indicating the sector’s overall health is still robust.

Nearly all key national manufacturing balances remained stagnant or fell, painting a picture of prolonged, slow manufacturing growth. Notably, the balance of manufacturing firms exporting their products reached a six year low.
Key findings in the Q3 2015 Quarterly Economic Survey:
• Overall, the results signal moderate economic growth over the next year, but the UK recovery is facing serious global challenges.
• In both manufacturing and services, most key balances were weaker in Q3 than in Q2, even though there were a few improvements.
• Even so, the falls in the Q3 service balances are in general smaller than the declines in the manufacturing balances.
• In absolute terms, most Q3 service balances are stronger than the manufacturing balances.
• Intentions to increase prices fell sharply in manufacturing (+23% in Q2 2015, +8% in Q3 2015) and rose slightly in services (+20% in Q2 2015, +23% in Q3 2015).
• The percentage of firms operating at full capacity increased slightly in both main sectors.

Services

• In services, there were improvements from Q2 to Q3 in the domestic sales balance (increasing from +31% to +36%) and the balance for employment in the previous three months (increasing from +22% to +24%).
• However, all the other key service balances declined slightly between Q2 and Q3. Confidence in profitability went from +45% to +42%, investment in plant & machinery went from +20% to +17% and employment expectations fell from +30% to +24%.

Manufacturing

• In manufacturing, the balances for exports, investment, confidence, employment expectations and cashflow recorded falls between Q2 and Q3.
• From Q2 2015 to Q3 2015 export sales fell from +14% to +10%, export orders fell from +15% to +10%, investment in training fell from +26% to +20%, confidence in turnover fell from +51% to +43%, confidence in profitability fell from +45% to +32%, employment growth expectations fell from +27% to +22% and cashflow fell from +11% to +9%.
• The domestic manufacturing balances for sales and orders were both static (+20% and +18% respectively) in Q3 2015, after weakening markedly in Q2 2015.
• The main exception to the pattern of weaker manufacturing balances was a Q3 improvement in the balance of manufacturers who expanded their workforce in the last three months (+20% in Q2 2015, +28% in Q3 2015).

John Longworth, Director General of the British Chambers of Commerce, said:
“These latest survey results are somewhat disappointing, as both manufacturing and service firms experienced dampened growth. The real area of concern is manufacturing. Confidence is low, as growth continued to fall, and our measure of manufacturing export growth hit a six year low. Services growth, on the other hand, dipped only slightly and overall trends show the sector remains relatively strong and stable.
“Global uncertainty, weakened demand from China and the strength of the pound are some of the factors likely hindering manufacturers’ performance. If the manufacturing sector has entered a prolonged period of slow growth, then closing the trade deficit and improving the current account deficit will become more difficult.
“If we want to make sure this period of two-tier growth is only temporary then we must help businesses get access to the working and growth capital that they require. We must also deal with the intensifying skills gap, which is holding British businesses back. The Chancellor’s Spending Review is the opportune time to tackle these shortcomings, not only for manufacturers but for all companies. Only action to help fix the fundamentals – skills, infrastructure and access to capital – can help end the UK’s two-tier growth pattern and ensure all businesses can grow.”

David Kern, Chief Economist at the British Chambers of Commerce, said:

“The Q3 2015 results point to moderate growth in the UK economy over the next year, driven mostly by services and by domestic demand. Overall, however the results are disappointing. Most key balances, for both manufacturing and services, are weaker in Q3 than in Q2. It is particularly concerning that the exports and confidence balances have weakened in both main sectors. The results suggest that the pace of GDP growth has decelerated slightly in Q3 2015.

“The manufacturing sector is facing major obstacles, while the service sector is more resilient overall. The Q3 falls in the manufacturing balances are in general larger than the declines in the service balances. In absolute terms, the manufacturing balances are weaker overall than the service balances. The exceptionally feeble manufacturing export balances are a stark reminder that rebalancing the economy and promoting exports in services must be national priorities.

“While we must not forget the strengths of the UK economy – after all we have higher growth than in most G7 economies and a dynamic and flexible labour market – the recovery is still fragile. Given the uncertain global situation, it is important to avoid unnecessary risks. The MPC should keep interest rates at their current low levels until well into 2016.”

Ends

New air service to Barcelona

Spanish airline Vueling is to run services from Leeds Bradford Airport to Barcelona from next Spring.

Twice weekly flights (Monday and Friday) will depart at 0915 and return at 0700. From June to September they will depart later at 1540 and return at 1310.

The schedule allows leisure passengers to take advantage of weekend break opportunities in Barcelona alongside offering corporate travellers a weekday business schedule.

Vueling, part of International Airlines Group (IAG), flies to over 100 destinations.

Tony Hallwood, Aviation Development Director of Leeds Bradford Airport said:
“We welcome the addition of Vueling as LBA’s newest carrier and this announcement is great news for Bradford and the Leeds City region. With great customer service and competitive fares the airline will be welcomed by both business and leisure travellers. We expect that Bradford will become popular destinations for inbound Spanish visitors as LBA becomes a new UK gateway for the airline.”

West & North Yorkshire Chamber of Commerce said:
“This announcement is fantastic news for our region, and further adds to the choice & connectivity already provided by our airport to customers. The new service will help drive in-bound business and tourism flows to the region via the Barcelona hub and the onward connections to it from other destinations across Spain.”

TV Licensing Rules for World Cup Viewing

The rugby world cup is well-underway and researchers claim that only one in three employees feeling informed of the rules when it comes to watching live TV at work. As a response, TV Licensing has developed a Workplace Viewing Guide to provide step-by-step guidance.
Not all businesses allow employees to watch TV and research suggests many employees may be unsure whether they are allowed to watch at work.

Matt Thompson spokesperson for TV Licensing in the North, said:
“Employers may bring TVs in to the workplace for the World Cup or let staff watch on their computers and or they may not allow viewing at all. It’s important that businesses communicate their policy to staff and managers know the law around viewing live TV in the workplace. A TV Licence is required if anyone – staff or customers – watches or records TV programmes at the same time as they are shown on TV, whether on a TV, tablet, computer or any other type of equipment2. Business owners and managers can visit tvlicensing.co.uk/businessinfo and download the Workplace Viewing Guide to display in the workplace, so it’s clear when a licence is needed.”

Note
Your licence for your home address covers you to watch live TV on any equipment away from your address as long as it is powered by batteries. If it is plugged into the mains, you need to be covered by a licence at the place you are using it.

For more information call the TV Licensing press office on 020 8752 6606 or email media.enquiries@tvlicensing.co.uk

EU reforms to influence business vote

Half (50%) of the senior business people polled in a major new British Chambers of Commerce survey have revealed that the concessions the Prime Minister brings back from Brussels will have an impact on their voting intentions in the upcoming EU referendum.

The findings from the leading business group demonstrate that many businesspeople have not yet taken a firm position on the question of Britain’s future relationship with the EU – and a clear desire for greater clarity from Downing Street.

If an in-out referendum were to be held tomorrow, 63% of businesspeople would vote to remain in the European Union, 27% would vote to leave, and 10% are unsure.  Yet fully 50% said their vote could change depending on David Cameron’s renegotiation package.

The survey polled over 2,000 senior business leaders from all sectors, regions and all company sizes during August 2015. Highlights – including business understanding, impacts, and priorities – are detailed below.

Commenting on the results, John Longworth, Director General of the British Chambers of Commerce, said:

“Businesspeople want more clarity on the Prime Minister’s renegotiation plans before they have their say on Britain’s future in the EU. With half keeping their options open before making up their mind on how to vote, business’s top concerns need to be at the top of Downing Street’s negotiation agenda.

“Businesspeople are demanding a real shift in the balance of power between the UK and Brussels in any deal. Clear safeguards for the UK, and greater decision-making here at home, are at the top of their priority list.”

Key highlights – August 2015 BCC Europe Survey

BUSINESS KNOWLEDGE

Businesspeople are following the EU debate closely, with 51% reading about it at least weekly, and a further 26% at least every fortnight.

Majorities say they are familiar with the implications of an in-out referendum, with 72% saying they understand the implications for their business and 69% saying they understand the implications for the UK.

BUSINESS IMPACTS

Over eight in ten business leaders report no material impacts of the planned referendum on their businesses to date.

If the UK were to leave the EU, 40% currently expect this would have a negative impact on their overall growth strategy; 40% expect it would have no impact; and 14% expect it would have a positive impact.

When asked about the impact of a future change in the UK’s status in the EU on their business, 46% of businesspeople expect a negative impact – but the same amount, 46%, expect either no impact or a positive impact.

THE PM’S RENEGOTIATION PACKAGE

Only 31% of businesspeople claim to be familiar with the PM’s renegotiation package – with those who are not at all familiar representing 30%.

Businesspeople want the Prime Minister to focus his aspirations for renegotiation on greater powers for the UK parliament to block proposed EU legislation (56%), allowing the UK to opt out from ‘ever closer union’ (41%) and greater UK control over migration (40%).

The most beneficial pan-EU reforms would be a reduction in regulation and red tape (59%) and a change in the balance of power between Brussels and individual member countries (45%). Some 11% do not believe any EU reforms would have a beneficial impact on their business.

VOTING INTENTIONS

Businesspeople who favour remaining in the EU are more committed to their position (48% completely committed) versus those who favour leaving the EU (37% completely committed). Notwithstanding, 50% of the total believe the Prime Minister’s reform package could affect their vote.

John Longworth, BCC Director General, also commented:

“Many assume that the EU referendum is a simple in-out debate where both camps are firmly entrenched in their positions, but this survey shows that businesspeople want more information and greater clarity, and for now at least their vote is still up for grabs.”

Full speed ahead for High Speed 2 as Chancellor opens £11.8bn bidding process

Chancellor of the Exchequer George Osborne will today announce a major new milestone for the government’s High Speed 2 rail project, kick-starting the bidding process for phase one of the mega construction project. At least seven new contracts will be opened up to companies, with a total combined value of £11.8bn.

The Chancellor will make the announcement at an event in Chengdu, China, aimed at wooing some of China’s biggest investors to be part of the project as well as a raft of other major UK infrastructure projects. Mr Osborne is also expected to announce a new ‘HS2 partnering day’ between British and Chinese firms to explore joining up on bids for contracts, as well as launching the Northern Powerhouse pitch book.

The event is part of a wider five day tour of China by the Chancellor aimed at deepening cooperation between the two countries and making China the UK’s second largest export market.

HS2 forms a major part of the government’s plan to rebalance the UK economy and build a Northern Powerhouse by providing high speed rail services from London to the Midlands, and the North. Construction of phase one is due to start in 2017, and when opened will slash the travel time between London and Birmingham from 1hr 21min to 49min. Work is also underway on developing plans to transform East-West rail links.

Speaking while travelling on part of China’s vast network of high speed railways the Chancellor said:

“This government is committed to rebalancing our economy and building a Northern Powerhouse, and improving transport links and launching HS2 is key to supporting long-term economic growth across the North and Midlands.

“That’s why I’m here in China today opening the bidding process for construction contracts worth £11.8bn, which will propel HS2 forward.  We are truly entering a golden era of cooperation between our two countries, and it’s crucial that businesses and communities from across the UK feel the full benefit of forging closer economic links with China.”

Transport Secretary Patrick McLoughlin said:

“HS2 provides an excellent opportunity for businesses across the UK with 25,000 jobs created during construction and 3,000 when up and running. The start of the procurement process for these significant contracts is a major step towards construction on HS2 getting underway in two years’ time and a massive opportunity to help rebalance our economy long before the trains start running in 2026.”

HS2 Ltd Chief Executive Simon Kirby said:

“The start of the civil engineering bidding process is a major milestone for HS2 as we continue to move towards the start of construction in 2017.

“Over the next decade, the winners of these contracts will go on to build 230km of bridges, tunnels and earthworks and create thousands of jobs across the construction industry. Together we will transform intercity rail travel in the UK, build specialist skills and expertise across the country, create at least 2,000 new apprenticeships and build a legacy to inspire the next generation of young engineers.”

The government is currently organising an ‘HS2 partnering day’ to give Chinese companies an opportunity to meet UK firms and establish potential partnerships to join up on bids. The Chancellor is also inviting Chinese participation in the HS2 skills college, which is due to open in 2017. A skills-swap programme would allow the UK to benefit from China’s expertise as a world leader on High Speed‎ Rail, and help Chinese investors better understand the UK market.

The Chancellor is also encouraging Chinese companies to take part in an HS2 ‘regeneration tour’, which would involve visiting areas of huge commercial opportunity in London, the Midlands and the North. Investors would have the chance to meet with relevant local authorities and visit station sites.

Top 10 advice calls

There is no such thing as a typical week for the Qdos Employment Law telephone advisers. The past seven days have had their usual mixture of the serious, the baffling and the funny to deal with.

What would you do as an employer if any of these situations happened to you in your business?

  1. You want to move from a two shift system to a three shift 24 hour arrangement. You want the shifts to change on a week about basis so that all employees do a pattern of 6am to 2pm, 2pm to 10pm and 10pm to 6am shifts. One of your employees produces a doctor’s letter stating that he cannot work nights on medical advice due to his medical issues. The job cannot be done from home.
  2. Your permanent 15 year old Saturday girl announces that she is pregnant. Since telling you, she has not turned up or contacted you for the past two weeks. You have sent a letter asking for information but have not received a reply.
  3. There have been a number of recent issues with an employee culminating in a written warning being issued to him for taking a period of holiday leave without permission. You have now been informed of the existence of some Facebook postings on the employee’s page which are derogatory and contain abusive references towards your business.
  4. You receive medical certificates from an employee. The doctor has confirmed the reason for the first period of absence as “unwell”. The next certificate confirms the reason for a further four week note as “feeling unwell”.
  5. An employee returns to work 10 weeks ago following a period of maternity leave. She returns on three days per week in her old job at her request. She is now pregnant again and is due to commence her next period of maternity leave in January. She confirms that she wishes to go back to working full time when she comes back again.
  6. One of your branch managers has today circulated an email to all of the 30 plus other branches, describing an element of his pay and conditions as “a joke”.
  7. An employee has returned from maternity leave recently and has had a couple of emergency days off to attend to her child. It was agreed that she could work from home but she failed to produce sufficient work output or to respond promptly to email and telephone contact.
  8. An offensive slogan has been discovered on some packaging which was put into a customer order. Two employees are implicated. One employee admits writing it but denies packing it. The other denies any involvement although his handwriting appears to match part of the slogan.
  9. A till shortage of £10 has been discovered. One of your managers is informed by an employee that he is responsible but that he has already put the cash back in the till this morning.
  10. A large section of your workforce, watched by one of your senior colleagues, uses a neighbouring car park during working hours so that two employees can have a race around it. One of them slips over and breaks his wrist.

If any of these situations sound familiar, then give the Chamber a call on 08455 240 240 for details of the HR service.

Choosing a good architect? Ask Allan!

We all know how and where to find a good architect…don’t we?!

Just in case you don’t, see Bradford Property Forum Vice-Chair Allan Booth’s top three tips on choosing a good one, when he took part in the Chamber’s radio show recently.

Visit the Chamber’s YouTube channel here.

Note: The show is broadcast on Bradford Community Broadcasting (BCB Radio – 106.6FM) on a regular basis, with business guests like Allan taking part each month.  The show – fronted by a Chamber staff member – focuses on topical business news and current affairs, but also covers the arts, sport, tourism, education, politics as and when required.  As the Chamber’s Marketing Manager, Darren Precious always says, the programme is “not afraid to tackle the big issues of the day!”

Allan Booth is a Director at Saltaire-based architects Rance Booth Smith.