Intelligence Briefing - 16 July 2010

Published: 16/07/2010

EEF meets key Select Committee Chair | Working with Ministers and Shadow Ministers | Political Party Conference plans taking shape | Weekly Focus | In the news | Economic data review | The week ahead

EEF meets key Select Committee Chair

This week we met with Adrian Bailey, the recently elected Chair of the House of Commons Business Select Committee, to discuss its priorities for the forthcoming Parliament. The Select Committees have an important role to play holding Government Departments to account and launching their own inquiries into relevant policy areas. In a wide-ranging discussion with Mr Bailey, we outlined current issues affecting manufacturing, including the need for more active measures to re-balancing the economy, tax issues and plans to replace RDAs with so-called Local Enterprise Partnerships. Mr Bailey has asked us to provide both written and oral evidence to a number of planned Committee inquiries and evidence sessions. We will be meeting other relevant Committee Chairs in the next few weeks.

Working with Ministers and Shadow Ministers

As reported last week, the Shadow Business Secretary, Pat McFadden MP, give a speech at EEF’s London office last week. You can read the speech here. Elsewhere our Chairman, Martin Temple, was one of the speakers, along with Business Minister, Mark Prisk, at an event held in by Siemens London, to discuss the challenges of meeting the UK’s manufacturing skills needs.

Political Party Conference plans taking shape

EEF is putting together a series of events at the forthcoming autumn political party conference – traditionally a good opportunity to get points across to policy-makers. We are holding joint events at the Labour Conference in Manchester (26-30 September) with the Fabian Society and at the Conservative Party Conference (3-6 October) in Birmingham with the Enterprise Forum. Further details and more events will be confirmed shortly, but if you are interested in finding out more or attending, please contact Steve Coventry at scoventry@eef.org.uk .

Weekly Focus

We have urged the government to show leadership in order to get energy policy back on track or risk problems with the future security and competitiveness of the country’s energy supply. As part of our Energy Action Plan published this week we have argued for a policy framework which will attract the estimated £200bn worth of investment needed and safeguard the interests of consumers. We have called to action in the following key areas:

1. Showing leadership on Nuclear policy

2. Making support for renewables more cost effective

3. Reforming the price of Carbon

4. Taking measures to address the growing risk to the security of supply from the UK’s increasing dependence on imported gas

5. Accelerating the development of Carbon Capture & Storage technologies

You can read more details by downloading the Energy Action Plan here.

In the news

Our Energy Action Plan (see above) received a lot of interest from the press, including an article in the FT, the Independent and the Daily Telegraph. You may also have heard members of the EEF team being interviewed on this subject on the BBC News Channel and Sky News. Elsewhere Steve Radley was a guest on Radio Five Live discussing this week’s employment figures, while our Chief Executive was quoted on the front page of early editions of the FT responding to calls to raise the EU’s carbon reduction target.

Week in Review

GDP Q1

Figures for GDP showed an increase of 0.3% in 2010q1. This is unrevised from the previous estimate and implies a year on year contraction of 0.2%. Output in productive industries grew by 1%, and manufacturing grew by 1.4% in q1.

Balance of Payments Q1

The current account Balance of Payments deficit was £9.6bn in the first quarter, down from a surplus of £0.5bn in 2009q4 (this figure has been revised upwards from a deficit of £1.7bn). An increase in payments to EU institutions saw the balance of current transfers increase by £1bn to £4.3bn.

Index of Services

Service sector output rose by 1% in the year to April, with growth in all five sectors. Distribution saw the strongest growth: 4.6% compared with April 2009. However, between March and April service sector output fell back 0.3%, largely due to a 1.9% fall in output in the transport, storage and communication sector.

Consumer Price Index

CPI annual inflation was 3.2 per cent in June, down from 3.4 per cent in May. Falling petrol and diesel prices are by far the main drivers to the downward pressure to the CPI, with prices for fuels and lubricants falling by 1.9 per cent this year between May and June compared to a rise of 3.8 per cent between the same two months a year ago. The largest upward pressures to the change in CPI inflation between May and June came from miscellaneous goods and services and air transport.

In the year to June, RPI inflation was 5.0 per cent, down from 5.1 per cent in May. The main factors affecting the CPI also affected the RPI. Additionally there was upward pressure to the change in the RPI annual rate from housing. This was driven by house depreciation, which rose this year but fell a year ago.

BRC / KPMG Retail Sales Monitor

June’s like-for-like retail sales values showed an increase of 1.2% compared with June 2009. Food sales growth was at a similar level to May, supported by the good weather and the World Cup. Clothing and footwear sales slowed. Internet/mail order/phone sales in June were 17.3% higher than one year a go.

Labour Market Statistics

The ILO measure of unemployment fell by 34,000 over the quarter to 2.47 million. The three-month unemployment rate fell slightly to 7.8% from last month’s figure of 7.9%. The claimant count measure of unemployment – which records the number of people claiming Job Seekers’ Allowance – was down by 20,800 to 1.46 million, the fifth consecutive monthly fall, and there are now 100,000 fewer claimants than at this point last year.

EEF Pay Bulletin

The three-month average pay settlement was 1.6% in June, up again from 1.5% in May and the highest reading since March 2009. The proportion of pay deals between 0.0% and 2.0% rose slightly to 38.3% in the three months to June, up from 38.3%. The proportion of pay deals between 2.0% and 3.0% also rose slightly to 28.0% from 27.0% in May. The monthly average pay settlement fell back to 1.9% in June, compared with 2.0% in May.

The week ahead

Tue 20th: Public Sector Finances (Jun)

Wed 21st: MPC minutes

Thu 22nd: Retail sales (Jun)

Fri 23rd: GDP (Q2, preliminary); Index of Services (May)


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