EEF blog

Insights into UK manufacturing

Why we're still talking about access to finance

Lee Hopley July 24, 2014 09:09

2000, 2002, 2011 and 2013?

This could be a fiendishly difficult question from a favourite quiz programme amongst EEF bloggers - Only Connect - to which the answer is the years in which reports looking at the state of competition in SME banking were published. The next year in this particular series looks like it will be 2016 if the Competition and Markets Authority (CMA) proceeds with a phase 2 investigation of the sector.

CMA concerns about concentration of BCA market

Following the Vickers report (2011) and the Parliamentary Commission on Banking Standards (2013) the CMA conducted another market study of Banking Services to small and medium-sized businesses. The review looked at core banking services for SMEs - business current accounts (BCAs), overdrafts and loans - and set out a number of conditions that one might expect to see in a well-functioning market, including SMEs having a broad choice of provider, products and services are customer focused, good levels of innovation, and new players easily entering the market and growing their market share.

In over 180 pages of evidence and analysis, the report concludes that these characteristics are not evident in the UK SME banking sector. This should not come as a surprise as this was broadly the conclusion that others have reached over the past decade. Rather the picture has consistently been one of mediocre satisfaction levels with banks but low levels of switching; a paucity of new entrants into the market, those new challengers remaining rather small in scale and persistent barriers to these entrants from the cost to establishing a (still important) branch network and the costs associated with gaining access to the payments system.

Some facts and figures

The CMA bolsters its arguments with a host of, now widely recognised, facts about the UK SME banking sector:

  • 85% of BCAs are provided by the four largest banks in England and Wales. Concentration levels are higher in Scotland and Nothern Ireland.
  • 4% of SMEs switched provider last year - a lower proportion than those changing their energy or telecomms supplier.
  • Between 10%-20% of SMEs say the service from their bank is poor, but 70% don't see much difference from other providers in the market and comparing prices of BCAs and loans is complex.

Is it all bad?

These stats are not encouraging, particularly as there has been relatively little movement on any of these challenges in recent years. This also doesn't consider what's been happening to the supply of finance since the financial crisis (not a consideration for the CMA in this phase of its review process).

But some things have been moving. We've seen some divestments from the major banks to establish new players in the market, there are greater efforts within government to improve the sharing of credit information, which should provide challengers with more information on potential SMEs customers and the British Business Bank is getting up and running with a range of solutions to boost the presence of challengers and provide more financing alternatives outside of mainstream banks.

So what next?

The incremental steps to facilitate more new entrants and get more churn in the market are fine and welcome, but it could take decades to see a step change in some of the statistics outlined above. Back in 2011 EEF said a clear and actionable response from government to the Vickers recommendations should be an urgent priority. Given the small steps we have seen since, further action on this front feels no less urgent.   

The CMA is not consulting on whether there should be an in-depth investigation into the markets for both personal and business current account and business loan markets and are inviting responses by 17th September (you can find more information here). 

The evidence from the phase 1 investigation would seem to put the balance in favour of further work in this area, if that is what's needed to adopt actions that would accelerate progress towards a more dynamic sector for businesses - not just to offer more choice today, but to ensure the very diverse community of SMEs we have in the UK can access a range of competitively priced financing solutions to support growth in the long run. We also need to ensure that the sector can support these businesses through the ups and the downs of the economic cycle. And with those points in mind a next-phase investigation should perhaps consider pricing in more detail and the extent to which government-routed financial interventions have operated through existing providers in recent years.

Ultimately this has been a longer road than many had hoped in the aftermath of the financial crisis, but we must stay focused on the outcomes of delivering a more dynamic and diverse financing landscape for investment and growth across UK SMEs. 

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July MPC meeting – summary of minutes

Neil Prothero July 23, 2014 10:40

As Lee highlighted towards the end of her recent labour market blog, economic indicators continue to present a mixed message over the likely timing of the first interest rate rise by the Bank of England. Proponents of a rate hike in the coming months point to robust GDP data and strong employment growth, while those of a more dovish tone highlight the very weak trend in wages, subdued inflation and the slump in UK productivity.

The minutes published today of the July meeting of the MPC showed that all nine members once again voted to maintain the Bank Rate at 0.5%, as they had done in each of the previous 34 meetings.

The overall tone of the report was fairly neutral: on the one hand the Committee stated that "economic momentum was looking more assured" and it was likely that the degree of slack in the economy was being absorbed more rapidly than previously thought, but on the other hand members acknowledged that there was "little indication of inflationary pressures building" and that a "premature tightening in monetary policy might leave the economy vulnerable to shocks".

The report noted that MPC members "put different weights on each element of these interpretations", implying a degree of divergent opinion, although it is striking how collegial the voting has remained despite an intensifying policy debate. According to the minutes, "for some members the decision had become more balanced in the past few months than earlier in the year", but it is still difficult to detect any notable shift in bias in the MPC’s stance. Financial markets continue to price in the first rate rise occurring in Q1 2015.

The decision

The minutes confirmed that all nine members of the MPC voted to maintain the Bank rate at 0.5% and the stock of purchased assets at £375 billion at the meeting on July 10th.

Here’s an overview of the main economic developments and issues noted in the minutes.

Global Outlook

  • On balance, outlook for the global economy had weakened slightly over the month.
  • Another downward revision to US Q1 GDP meant that full-year growth forecasts would have to be lowered, despite ongoing positive trends in labour market data.
  • Survey data pointed to a weakening of activity in the euro zone going into the second half of 2014.
  • No significant developments in major emerging market economies, with data pointing to steady growth in China in Q2, against the backdrop of continuing banking sector risks.
  • Mixed developments in commodity markets, with agricultural prices falling as industrial metals prices rose. Despite geopolitical concerns, oil prices had traded in tight range around US$110 per barrel.

Financial markets

  • Noticeable increase in UK short-term interest rates and a further appreciation of sterling.
  • Some evidence of reduction in global risk appetite. Low levels of asset price volatility, amid continuing search for yield among investors.
  • Increase in Bank Rate to 0.75% was now fully priced into markets by Q1 2015.
  • Policy easing measures by ECB broadly expected, with little impact on bank funding costs.

Domestic market

  • Trend of UK activity growth at or slightly above longer-term trend had continued. Some indications that gradual slowing might occur in second half of 2014.
  • Business surveys continued to point to strong near-term UK growth, although export picture had weakened and signs of moderation in housing activity.
  • Generally positive picture in corporate sector. Improving credit conditions for larger companies and modest up-tick in bank lending to private firms. Expectations for recruitment and investment remained buoyant.
  • Outlook for household spending growth a little weaker.

Prices and costs

  • Rise in CPI inflation to 1.9% in June had exceeded Bank expectations.
  • Strong employment growth implied further disappointment in productivity.
  • Wage growth had remained surprisingly weak.
  • Recent job growth had been more heavily skewed towards lower skilled occupations.
  • Bank offered two possible explanations for contrasting wage and employment trends: first, that lag between labour market tightening and wage growth was longer than previously assumed; second, that effective labour supply had increased, increasing slack and restraining wages.

 

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Summer Homework for our new skills and education Ministers

Verity O'Keefe July 21, 2014 08:00

From tomorrow, the House of Commons is in Recess. This will give some of our Ministers and Secretaries of State the opportunity to reflect on their new posts and drum up ideas ready to swing into action in September. So we have set some homework for those new to the skills and education brief. We’ve given our answers – but what will theirs be?

Nick Boles MP – Minister for Skills and Enterprise

Q1 – How can Government best continue to drive forward the employer ownership of skills agenda?

EEF Answer: The Employer Ownership of Skills agenda has been welcomed by businesses, who have had the opportunity to take greater control of the skills system and deliver projects that meet their specific needs. The recent announcement of £30m of funding specifically for engineering companies has demonstrated that Government has fully acknowledged that in the engineering sector skills are scarce and employers need support in accessing the skills they need. However, the current contribution thresholds for employers to be eligible for the Fund, and the decision that businesses are not allowed to collaborate, has deterred those companies in most need – SMEs - from engaging. Government must immediately address these concerns.

Q2 – How can Government ensure a smooth transition towards employer-routed funding for Apprenticeships?

EEF Answer: EEF fully supports the principle of giving employers control of apprenticeship funding; enabling them to become the customer and demand the quality, relevant provision they have been seeking. The mechanism that will be used is still being consulted on. In order to ensure a smooth transition to this brave new world, government should slow down the reforms and not make decisions in haste. Further consultation with business is essential - not only on the preferred mechanism but how the system will work in practice.

Rt Hon Greg Clark MP – Minister for Universities and Science

Q1 – How can we ensure that engineering graduates are leaving university with the relevant experience and knowledge demanded by employers?

EEF Answer: Some 66% of manufacturers plan to recruit an engineering graduate in the next three years. However, employers have raised concerns as to the quality of those leaving the higher education system. In particular, employers are looking for graduates with industry experience which can be acquired through internships and placements. Government should therefore ensure all HE courses include at least an optional placement year to encourage this. In addition, government should support businesses to engage more with universities to encourage employers to get involved in the design and development of courses to ensure they meet industry needs. Much of this is around access to information – government, together with the HE sector and industry, should develop a model like the National Apprenticeship Service to host this information.

Q2 – How can Government ensure that universities have the capacity and capability to deliver high quality STEM (science, technology, engineering and maths) courses demanded by employers?

EEF Answer: Since 2010, the number of engineering degrees has increased by around 8.6%. However, there remains a significant gap between applications and acceptances. Some of this may have been due to the restrictions on student numbers. However, this has now been lifted. The difficulties faced by universities are that they don’t have the resources to deliver more engineering courses. The cost of delivering an engineering course is greater than the fee paid by the learner and the top up premium. The recent £200m fund to improve STEM teaching is welcome, but this is a short-term fix. Government needs to deliver a long-term strategy to ensure that universities are not rejecting capable engineering undergraduates, who are desperately required by industry, due to a lack of capacity.

Rt Hon Nicky Morgan MP – Secretary of State for Education

Q1 – How can we ensure young people know about the opportunities of a career in manufacturing?

EEF Answer: Here we should let the numbers speak for themselves – over six in ten manufacturers say delivering specific, informed, careers advice in schools will encourage more young people into manufacturing. This must be the focus for Government. Careers ‘inspiration’ should begin in Primary School – this should be a light touch approach that gives children an idea of what they could do in the future. Prior to making subject choices at Key Stage 4, young people should have access to independent face-to-face advice, which should continue onto Key Stage 5. Work-based learning and work experience should begin in Key Stage 4 and again be encouraged throughout Key Stage 5.

Q2 – How can we better broker relationships between employers and local schools?

EEF Answer: EEF members are already heavily engaged with schools – seven in ten offer work experience and over half offer site visits or go into schools. However, we need to see more of this happening. There are many occasions when companies, in particular SMEs, say they struggle to engage with schools – this can be because they don’t have the right contacts or don’t know how to ‘sell themselves’ to local schools. There is still some myth-busting to do around health and safety legislation, and insurance liabilities, but much of this can be overcome with appropriate guidance. What Government needs to do is require all schools to engage with employers as part of delivering careers provision – changing the wording of the current guidance on careers provision from ‘should’ engage to ‘must’ engage is a quick and simple solution. We also need to ensure that those teachers delivering careers advice, whether informally or specifically, know about local labour market opportunities. Therefore teachers should be required to spend two to five days in local industry to better understand the opportunities outside their school’s doorstep.

Well that’s an A* for EEF…..but how will our new Ministers and Secretary of State score?

The pressing need for an independent infrastructure body is clear

Chris Richards July 20, 2014 08:45

In a letter and article published in today's Sunday Telegraph, EEF spearheads the urgent call for the UK to establish an independent infrastructure body. This body would identify and kick start the debate on our long term infrastructure requirements as a country.

A full copy of the letter can be found here with a list of the organisations who backed us in making this call. Alongside EEF this included:

There were also a number of organisations who expressed support but were unable to sign a letter within the timescales. 

We argued that any established organisation should be based on five key principles:

  • Accountability to Parliament not Government – giving it independence
  • Rest on strong engagement and consultation with the public, businesses, government, political and other stakeholders
  • Look ahead at the UK’s need for infrastructure, set these out in detail and kick start the process to find potential solutions
  • Have ownership of the methodology to appraise suggested projects in each sector in a uniform way
  • Leave final decisions on which projects to take ahead with Government and Parliament

In recent years, to speed up the delivery of projects, governments have sought to streamline the process introducing reforms such as changes to the way strategic roads are managed, smoothing the planning process for nationally significant projects and setting up the Airports Commission to provide a recommendation on maintaining Britain’s aviation hub status.

This is a good start; however the time has come for the UK to start identifying the challenges and potential solutions of tomorrow not simply tackling yesterday’s long delayed projects.

This is important as business investment, sustainable high skilled jobs and economic growth are all linked to the provision and maintenance of key infrastructure, not to mention ensuring we can successfully meet our environmental targets. Current infrastructure plans barely stretch beyond the next Parliament.

The letter today, signed by a broad range of business organisations, the TUC, airports and other companies, seeks to:

  • establish the lack of a long term infrastructure plan as a clear issue and something which is not limited to just one political party
  • put a line in the sand on some basic principles that any proposals in this space should have if it is to prove successful
  • amplify this issue as an important one that all parties need to have a solution to come the next election

EEF felt now was the right time to make these points clear as we are fast approaching the next  General election; all political parties need to show leadership on this issue, as we said in the letter:

We all want a more productive, competitive and environmentally sustainable economy. This demands a new way of thinking about how we develop and design the world class infrastructure needed to support it.

Pressing need for an independent infrastructure body - final letter-1.pdf (79.62 kb)

Pay Bulletin in July

Joey Lee July 18, 2014 10:06

Our Pay Bulletin for July was published yesterday.  It is a monthly comprehensive survey of pay settlements, deferments and pay freezes in over 400 of our member companies. It consists of two main parts: pay trends and inflation trends.

 

How is pay trending?

The three-month average pay settlement rose 0.1% to 2.6% year-on-year in June.  Our data is consistent with the average level of settlements we have seen since the beginning of 2011.

 
 
Source: EEF Pay Bulletin

The Labour Statistics published by ONS continue to show that pay growth in manufacturing outpaces the trend in the broader economy. In the three months to May, pay rose by 1.7% year on year in manufacturing; whereas in the whole economy, pay rose by just 0.3%, a slowdown of 0.5 percentage points from the revised figure of previous month. For a more in depth view of the Labour Statistics, please read Lee's blog from yesterday.

 

And what about inflation?

The annual CPI inflation rate was 1.9% in June, accelerating from 1.5% in May, in line with our forecast from last month.  This latest figure continues the trend of below 2.0% inflation during 2014. The rise was mainly a result of unusual seasonal patterns in air transport and clothing prices, women’s outerwear in particular, which combined to create unfavourable base effects. There were no large downward contributions in June, but a minor downward effect from miscellaneous goods and services.


Below is an interactive graph which illustrates the contributions to the change(in %) in the CPI 12-month rate in June and May:



Our inflation forecasts are similar to last month. The base effects mentioned above should soon diminish and press the CPI inflation down to 1.5% in July. Moving forward, inflation should remain below the 2% target for the rest of the year. After the Iraq-related rally, oil prices have dropped significantly over the past week. And with Libya now restoring oil production, oil prices are expected to drop further, whilst the pound is likely to stay strong. Inflationary pressure along the supply chain from manufacturers will remain subdued, as previously reported, with spare capacity continuing to bear down on margins and wages.

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Labour market still on a roll

Lee Hopley July 16, 2014 12:41

The UK's labour market data has ceased to surprise. Employment has been steadily climbing for the past year and was up 108,000 on the month. The latest statistics also show the unemployment rate hit 6.5% in May - down from 7.8% a year ago and the lowest since the beginning of 2009.

Unemployment rate
Source: National Statistics

Employment growth was seen across all age groups and in both full-time and part-time employment - although the former was stronger and average hours worked nudged a bit higher too. With the more up-to-date figures on the numbers claiming unemployment-related benefits dropping by a further 36,000 in June and the number of vacancies continuing to rise, for the next few months at least we should expect the employment data to be showing more of the same. 

Not so fast...

While the employment data is roaring ahead, pay across the economy is showing relatively little movement.... still. Weekly pay (excluding bonuses) rose by 0.7% in the past three months compared with a year ago and factoring in bonus pay brings that rate of increase down to a meagre 0.3% - either way, running a far bit below the rate of CPI, which measured 1.9% in June.

There are inevitable sector differences, with manufacturing continue to be one part of the economy with faster growth in earnings.

Average earnings growth
% change past three months on a year ago
Source: National Statistics
* Public sector exc financial services

Looking ahead on the pay front the data on overall earnings growth could look substantially worse next month due to significant growth in bonus payments 12 months ago, but these effects will drop out the following month, when earnings growth should come back to current levels.

Does this change anything?

From the MPC's perspective probably not. The employment data say raise rates, the wage numbers say hold off for now. It seems as though the Committee will need to see some concrete signs of productivity picking up and that feeding through to higher pay before they'll make their first move. And whether that comes before the year is out is yet to be seen.

 

EEF will be blogging on our own Pay Survey later this week   

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What's happening with prices?

Felicity Burch July 15, 2014 10:05

CPI data released this morning shows that consumer prices rose by 1.9% in the twelve months to June, up from 1.5% in May. 

The biggest contribution to this was clothing and footwear prices, which normally fall between May and June as the summer sales begin, but this year average prices actually rose, particularly when it came to women’s outerwear.

Other upwards contributions came from:

  • Food & non-alcoholic beverages, as a result of base effects:  on average prices rose between May and June this year but fell between the same two months a year ago.
  • Transport prices also rose, by 0.6% between May and June 2014, compared with a rise of 0.1% between the same two months a year earlier. The largest upward contribution came from air transport, though this was partially offset by a small downward contribution from motor fuels prices which rose by less this year than they did last year.
  • Furniture, household equipment & maintenance: prices, overall, rose by 0.2% between May and June this year but fell by 0.5% a year ago. The main upward effect came from furniture & furnishings where prices rose by more than a year ago.

There were no large downward contributions to the change in the CPI 12-month rate between May and June 2014.

Although CPI inflation increased, it is the sixth consecutive month in which the CPI rate has been below the Bank of England’s target rate of 2.0%. A range of factors should continue to keep inflation subdued, including the stronger pound; limited inflationary pressure from commodities; and spare capacity, which is likely to continue to bear down on margins and wages.

 

Today’s Producer Prices Index highlights the limited impact from commodities, with manufacturers’ input prices falling by 0.8% between May and June, input prices are now down 4.4% over the year.

The largest contributions to the fall were:

  • Home-produced food prices which fell by 11.9% in the year to June. This is the biggest annual fall since June 2009. The decrease was a result of a reduction in the price of home-produced root crops, such as potatoes.
  • Imported chemical prices fell 4.5% in the year to June. The decrease was caused by the fall in imported other organic basic chemicals.

As a result output price rises have remained low, prices increased by 0.2% over the year and the annual rate of output price inflation has remained below 1% for all of 2014 to date.

 

--

All data is from ONS.

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Germany vs. Argentina - the trade showdown

Madeleine Scott July 11, 2014 14:00

Sunday sees the culmination of the World Cup , with the final being played between Germany and Argentina. Here's a look at the manufactured goods trade relationship between the UK and the two finalists.

All data from uktradeinfo, SITC codes 5,6,7,8

UK manufactured goods exports, 2013

Germany knock Argentina sideways with their importance as a UK export destination - the £24.8bn worth of manufactured goods exported to our European neighbours dwarves the £300.7m worth sent to Argentina in 2013.

UK manufactured goods imports, 2013

Once again there's no contest, with imports from Germany worth £50.5bn compared with just £38bn of manufactured goods received into the UK from Argentina in 2013.

But this does mean the UK has an overall trade deficit of £25.7bn with Germany, in contrast to a surplus of £262.6m with Argentina.

 

Top five manufactured goods sub-sectors* exported from UK, 2013

Road vehicles, pharmaceutical products and power generation equipment appear in the top five subsectors list for both countries. UK manufactured goods exports to Germany show their broad based nature with the top four all worth more than £2bn.

*2 digit SITC codes from SITC 5,6,7,8

Top five manufactured goods sub-sectors* imported to UK, 2013

What we send to Germany, we get back and even more some... Several chemicals sub-sectors do well for Argentina.

*2 digit SITC codes from SITC 5,6,7,8

Number of manufactured goods sub-sectors* where the UK has a positive trade balance, 2013

In six subsectors the UK has a surplus with Germany including other transport equipment (also in the top five export table); power generating machinery and equipment and articles of apparel and clothing accessories.

The UK has a deficit with Argentina in just eight subsectors including their top import of essential oils and perfume materials, as well as leather goods and iron and steel.

*Out of 35, 2 digit SITC codes from SITC 5,6,7,8

Predictions?

With manufactured goods exports from the UK to Germany over 80 times that of exports to Argentina, there's no real question in the result. With the UK and Germany part of the EU, the trading relationship is just too strong for Argentina to even make a dent. Final score? (Obviously from my own complicated matrix of factors... definitely not a wild guess) 3-1 to our European neighbours.

 

Holiday pay - what’s all the fuss about?

tthomas July 11, 2014 10:42

Many manufacturers have heard something about holiday pay being a problem, but might not know what the problem is.

If you currently pay overtime, commission, bonuses or anything other than just basic pay, read on.

Ignoring the technical legal detail, here’s a run-down of the basic issue – but please note that not everything is covered.

First of all, could this cost my business anything?

Yes. There are very, very few businesses we have spoken to, (and we have spoken with many), who don’t have some financial liability as a result of this issue.

Typically, the liabilities amount to 3-4% of current payroll, but there are also likely to be some significant past liabilities – for many SMEs easily over £1m. For some, much more.

What’s the problem?

This is all tied into the Working Time Directive, or the WTD – it’s no news that this gives every worker a right to 4 weeks paid leave a year. But, the directive doesn’t tell us what the “paid” element of this is.

How is pay for a worker on leave to be calculated?  UK law has a way of calculating this, which is generally, quite narrow. But, given this is EU law, the UK doesn’t have the final say – that rests with the Court of Justice.

And the Court has a different view, which is that anything that is intrinsically linked to the job should be included. They have already decided that some allowances should be included and also that commission should.

They are likely to say that other than small amounts, irregularly paid to employees (which will account for almost nothing) almost everything else should be included in the holiday pay pot.

So, what’s the impact of all this?

The bill for holiday pay will go up, unless you are an employer who already calculates holiday pay to include everything/almost everything which an employee earns over a year – we have found very few.

Our members are telling us that for a typical manufacturing company this will add 3-4% to payroll.

Does this affect only hourly paid staff then?

No – it does affect many hourly paid staff who, for example, work overtime, but also salaried staff who might be paid allowances or commission.

What did you say at the start about “significant past liabilities”?

So far, this is only half the story. Let’s assume that you’re reading this and that your business has never included all the “add-ons” to holiday pay that the Court of Justice has added in. Well, this means that you are underpaying your employees for their holiday.

In the UK, if an employee is underpaid, or something is taken out of their pay unlawfully, they can bring a claim. No real surprise there. But, if there are a series of similar deductions from pay, then the employee can connect them together, in a single claim.

What this means then is that an employee can claim “back-pay” – the pay that they would have received in the past, on the basis of the Court of Justices’ new calculation.

So how far back can an employee claim?

1998, or the start of employment, whichever is the later date. Employers with long service employees therefore face the greatest exposure.

Can we change the law?

Unfortunately not as it's European Law. The only thing we have some control over (but not total) is the back-pay issue, which we can do something about. EEF has proposed changes to government, who are acutely aware of the issue.

But I’ve always complied with UK law

To the huge frustration of many UK employers, this is true – they have been paying their workers for their holiday quite correctly according to UK law. The problem is that the Court of Justice have moved the goal posts and widened them, hugely.

What about overtime?

Currently, today, it has not been finally decided if overtime should be included in holiday pay – but, many experts are expecting that it will be.

Is that it - what do I do now?

Unfortunately, that’s not it – technically the problem only extends to 4 weeks of annual leave, not all of it, further complicating matters, and it’s possible that there may be past liabilities for tax, NI and pensions.

EEF is running seminars for employers, both members and non-members – check out the EEF website

The good news amongst all the bad is that there are things that employers can do now to reduce the impact of this. It’s not a cure, but acting early is likely to help.

Subdued trade picture

Neil Prothero July 10, 2014 12:33

The latest trade figures for May were published this morning and they continue to show a fairly subdued trend in external demand. Here are the main points from the ONS release:

  • The deficit on trade in goods widened by £0.4bn to £26.3bn in the three months ending May 2014, compared with the previous three-month period.
  • Goods imports rose faster than exports - goods exports increased by £0.1bn (0.1%) to £72.6bn, while goods imports rose by £0.5bn (0.5%) to £98.9bn.
  • Exports of cars and of other consumer goods rose over the three-month period, but exports of all other major categories recorded declines.

Goods trade deficit
(£ bn)

 

Source: Office for National Statistics

  • Over same three-month period, the deficit on trade in goods with EU countries narrowed by £1.7bn to £15.1bn.
  • Exports to the EU increased by £0.6bn (1.7%) to £36.6bn (mainly oil) and imports from the EU fell by £1.0bn (2%) to £51.7bn.
  • Deficit on trade in goods with non-EU countries widened by £2bn to £11.3bn.
  • Exports to the EU increased by £0.6bn (1.7%) to £36.6bn (mainly oil) and imports from the EU fell by £1.0bn (2%) to £51.7bn.
  • Exports to non-EU countries decreased by £0.5bn (1.5%) to £35.9bn and imports from non-EU countries increased by £1.5bn (3.3%) to £47.2bn.
  • As things stand, net trade likely to act as drag on Q2 UK GDP. In Q2 so far, total imports up 0.3% on Q1, while total exports down 0.7%.
  • The coalition government has set a target for the total value of UK exports of goods and services to rise to £1 trillion by 2020. As the chart below shows, the recent trend is not especially encouraging.

Total value of goods and services exports
(£ bn)

Source; Office for National Statistics

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Disclaimer
This is an informal blog about manufacturing and the economy written by EEF's policy and representation staff. While it is written from an EEF perspective, contributions should not be taken as formal statements of EEF policy, unless stated otherwise. Nor does it cover all the issues on which we campaign - you can check these out in more detail at our main site.

We welcome and encourage comments, but we reserve the right to remove any that are offensive or irrelevant. We are not responsible for the content of external internet sites.

About EEF

EEF helps manufacturing businesses evolve and compete.  We provide business services that make them more efficient and management intelligence that helps them plan.  Our work with government encourages policies that make it easy for them to operate, innovate and grow.

Find out more at www.eef.org.uk