Bank of
England
We met the Chief Economist of the Bank of England, Charles Bean, along with two other members of the Monetary Policy Committee, Kate Barker and Andrew Sentance to brief them on conditions in our sector and issues of concern for manufacturers. We discussed our business trends survey and the factors affecting input costs including high energy and raw material costs, especially steel.
We also covered our current view on interest rates that given the relatively healthy picture form our sector and, concerns on inflation, it is difficult for us to argue for significant reductions in rates unless the economy deteriorates sharply. In terms of the labour market, they were especially interested in the situation regarding the recruitment and retention of migrant labour. For further information, contact Chief Economist, Steve Radley sradley@eef.org.uk
Better Regulation
A group of member companies met with the Minister for Competitiveness, Baroness Vadera and the Chief Executive of the Better Regulation Executive, William Sargent to discuss a number of current issues. They updated us on progress on the government’s simplification agenda and regulatory budgets.
Members also had the chance to suggest improvements to the guidance from Business Link and regulatory concerns in areas ranging from pensions regulation to Climate Change. For further information contact Director of External Affairs, Ian Peters ipeters@eef.org.uk
Business trends
Our second quarter engineering outlook survey showed that manufacturers are continuing to defy the pervading economic gloom by posting the tenth consecutive quarter of healthy growth.
Despite reports of weakening economic growth in the UK, firms reported a rise in domestic orders. Export orders have also remained relatively strong although there are indications of a softening, possibly due to weakening conditions in the United States.
The survey did however add to the Bank of England’s concerns about inflation with firms having increased prices and more expecting to do so. In contrast, it also suggests that manufacturers have not been able to pass on all of the cost rises they have suffered and that profit margins have been squeezed. In addition, higher inflation is not currently feeding into higher wage settlements, with companies bearing down on wage costs to offset increases in other costs. A full copy of the survey is available from our website. For further information, contact Chief Economist, Steve Radley sradley@eef.org.uk
Public Procurement
We have been asked to contribute to a new government review of public procurement announced in the 2008 Budget. While there have been many fine words on improving the quality of public procurement, we view this new review as a genuine opportunity to improve our members’ access to public sector contracts.
To guide our input, we would like to draw on the experiences and expertise of our members through an SME Procurement Panel which will inform our response and feed directly in to the official review.
It will also participate in a workshop, run by EEF and officials from the government’s review and serve as a sounding board for our final recommendations. It is likely this will be held at our offices in London in July and if you are interested in participating in the workshop, please confirm your availability with Charlotte Greenidge at either cgreenidge@eef.org.uk or 020 7654 1531.
Pensions
Over the last couple of weeks, we have met a number of key Peers to discuss the Pensions Bill. In these briefings, we have expressed our broad support for this Bill but continued to emphasise that the government needs to provide smaller employers with some initial financial assistance when personal accounts, the new low-cost savings scheme for employees without access to an occupational pension scheme, are introduced in 2012.
It should also build on its initial proposals to deregulate occupational pensions with a rolling programme of deregulation. In advance of the Pensions Bill's Second Reading in the House of Lords next week we have also sent a briefing to a number of Peers with an interest in pensions issues including Lord Turner who chaired the Pensions Commission. For further information, please contact David Yeandle, EEF Deputy Director of Employment Policy, at dyeandle@eef.org.uk