Build up to the Budget / Case made for flexible labour markets in Europe / EEF works to get government thinking again on red tape / Weekly Focus / In the news / Economic data review / The week ahead
Build-up to the Budget
We had further discussions with officials from HM Treasury about our recommendations for tax reform to support economic rebalancing and the approach to deficit reduction and public spending decisions ahead of the emergency Budget on 22nd June. Since the election we have been talking to officials and Ministers in the Department for Business and Treasury on the need for tax policy to support the investment necessary for better balanced growth. We will publish our top ten Budget predictions in next week’s Intelligence Briefing and will provide members instant reaction on the day, as well as more in-depth coverage in Briefing on 25th June. In the meantime you can keep up-to-date with developments at our blog.
For further information on our Budget coverage contact Steve Coventry, Senior External Affairs Adviser
Case made for flexible labour markets in Europe
This week we attended a lunch that members of CEEMET, the European employers’ organisation to which EEF belongs, had in Brussels with Anabela Gago, a key advisor to Commissioner Andor, the Commissioner for Employment and Social Affairs. Over lunch, we stressed that European manufacturers need a flexible labour market in Europe to compete in a global marketplace and that any changes to the Working Time Directive must therefore involve the retention of the individual opt out from the average 48-hour week.
For further information, contact David Yeandle, Head of Employment Policy
EEF works to get government thinking again on redtape
We took part in the first stage of the Better Regulation Executive's External Validation Panel. This body reviews the claims made by different government departments to have made savings in the administrative costs borne by business, as part of the government's regulation simplification plans. During the discussion the group looked at how departments had engaged with business, whether genuine reductions in burdens have been achieved and whether these have been clearly communicated to business. In a number of cases the group has decided to ask government departments to provide more evidence of the progress they have made.
For further information contact Stephen Radley, Director of External Affairs
Weekly focus
Our latest Business Trends survey, published earlier this week, continued the tally of positive manufacturing indicators we’ve seen over the past six months. The balance of companies reporting an increase in output and orders over the past three months leapt to record high as demand in both the domestic and exports markets continued to improve. Indeed our survey results have gone from historic lows to record highs in the space of a year. In line with what we saw in the official data for the first quarter of this year, the recovery appears to be broad based across all sectors of manufacturing.
The pick up in demand and output over recent quarters is also leading to some recruitment, with anecdotal evidence telling us that this is both employees on temporary contracts – to maintain flexibility – and also permanent employees. While this suggests there is some confidence building across the sector, it also points to the potential for skill shortages to become an issue once again.
Looking to the next quarter, the majority of companies expect output and orders to be the same or higher. But there is some caution about the strength of the recovery later in the year, with many companies raising concerns about the prospects for growth in the eurozone and North America. Our Manufacturing Outlook provides our latest forecast for manufacturing, the UK economy and key international indicators.
In the News
Our business trends survey led coverage this week and was widely reported at national and regional level, as well as in the trades. Examples included The Guardian, Independent and FT and The Engineer Magazine. At regional level our Head of External Affairs in the North East, Tony Sarginson, gave a number of radio interviews on the survey, whilst separately we announced the appointment of our new South East Director Steve Chicken who was subsequently interviewed on BBC Radio Cambridge.
Week in Review
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 BRC/KPMG Retail Monitor
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Total sales values were up 3% in May compared with like for like sales one year a go. Retail sales were also up, by 0.8%. Much of the growth came from clothing and footwear; outdoor DIY; and leisure, all of which benefited from the sunny weather. Big-ticket furnishing and home wares items struggled in the face of some continued consumer uncertainty around job and income prospects. |
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 UK Trade
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Figures from the ONS showed the trade deficit has widened from £7.259bn in March to £7.279bn in April, despite expectations that the deficit would narrow. Exports fell 0.6% and imports fell by 0.4% on the month. |
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 MPC Announcement
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Once again interest rates remained at 0.5% and the size of the asset purchase programme was held at £200bn. The Bank of England is unlikely to tighten monetary policy in the coming months, though increasing expectations of inflation may become an issue. |
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 Index of Production
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Total production and manufacturing production were both down by 0.4% on last month. However, year on year growth rates remain strong, with manufacturing output 3.4% higher than in April 2009. |
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 BoE inflation attitudes survey
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Median expectations for the rate of inflation rose from 2.5% in the last quarter, to 3.3%. This will be a concern for the Bank of England, especially as 66% of respondents said interest rates should rise rather than allow prices to rise. |
The week ahead
Tue 15th: Consumer Price Indices
Wed 16th: Labour Market Statistics
Thu 17th: Retail Sales
Fri 18th: Public Sector Finances
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