Intelligence Briefing 10th September 2015

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In this issue: Weekly Focus: Quarterly EEF/DLA Piper Manufacturing Outlook report published | EEF’s Party Conference Programme | Economic Policy Group meet with BIS Permanent Secretary | Roundtable dinner with Financial Times Political Editor | EEF attends Energy and Climate Change Select Committee Forum | EEF meets with new Labour MP for Aberavon | Devolution on the agenda with Coventry North West MP | EEF submits Spending Review submission to Treasury | In the media | Week in review | The week ahead | Blogs this week                                               

Weekly Focus: Quarterly EEF/DLA Piper Manufacturing Outlook report published

EEF published its third quarter Manufacturing Outlook this week with DLA Piper, which analyses recent industry trends from manufacturers. The headlines appear disappointing, with all indicators down compared to last quarter in light of growing concern about global economic developments. The report reveals five key trends in UK manufacturers:

  1. All indicators have weakened over the past three months: The main output and order indicators have continued to slide over the past three months. The balance of companies reporting growth in output fell from a high of +26% in 2014q2 to -2% in 2015q3. This is the first negative balance seen since the beginning of 2013 and the lowest since the end of 2009. New orders from both UK and overseas customers have also followed a similar trend.
  2. Growth prospects vary: The UK industry is diverse, with some sectors faring more strongly than others. Sectors exposed to oil and gas, such as mechanical equipment and metals, have continued to perform weakly due to the slump of oil prices from mid-2014. Consumer-facing sectors such as food and motor vehicles are bucking the trend and this is expected to continue in the final months of the year.
  3. China is a growing concern: China is one of the UK’s top ten markets for goods exports and just under half of companies surveyed are concerned about and monitoring growth developments in the region. The proportion of companies singling out Asia as a potential growth region has halved since the start of this year.
  4. Long term confidence has cooled not collapsed: Although manufacturing has slowed since the start of the year, companies are still reporting modest levels of optimism about their business prospects in the next 12 months.
  5. Manufacturing will still grow this year, but by less than previously expected: Weaker than expected performance of manufacturing reported by the ONS in the first half of the year has had an implication on our full year forecasts. There have also been similar downgrades in industry forecasts across other parts of the developed world, highlighting that the UK is not alone in seeing a loss of growth momentum this year.

For further information please Lee Hopley, Chief Economist

EEF’s Party Conference Programme

This year EEF will again be co-hosting business receptions and panel debates at the Conservative and Labour party conferences. Full details are available below. Please note that although the two panel events are open to anyone to attend, the business receptions are invitation-only, so if you would like to attend either of these please contact Rocky Lorusso on rlorusso@eef.org.uk or 020 7654 1575.

Labour Party Conference:

Business Reception with Demos, BCC, EEF, FSB, ACCA, ICAEW, IPSE (by invitation only)
Date/time: 18.00-19.30, Sunday 27 September
Venue: Brighton Musical Hall, 127 Kings Road Arches, Brighton, East Sussex, BN1 2FN

Speakers:

Chuka Umunna MP, Shadow Business Secretary
Terry Scuoler, Chief Executive of EEF

Fabian Society/EEF Fringe Panel Event

Title: ‘The path to prosperity: solving Britain’s productivity puzzle’
Date/time: 12:30-13:45, Monday 28 September
Venue: Holiday Inn, Brighton

Speakers:

Stephen Doughty MP, Shadow Minister for Business, Innovation and Skills
Seema Malhotra MP (Chair)
Heather Stewart, Economics Editor, The Observer
Terry Scuoler, Chief Executive, EEF

Conservative Party Conference:

Business reception with Enterprise Forum, BCC, EEF, FSB, ACCA, ICAEW, IPSE (by invitation only)
Date/time: 17.45-19.00, Monday 5 October
Venue: Alexandra B, Midland Hotel, Manchester (secure area)

Speakers:

Rt Hon George Osborne MP, Chancellor of the Exchequer
Mike Cherry, Policy Director, FSB

Enterprise Forum/EEF Fringe Panel Event

Title: ‘Winning the global race – Delivering a strategy for British business success’
Date/time: 12.30-14.00, Tuesday 6 October
Venue: Arora Hotel, 18-24 Princess Street, Manchester M1 4LY

Speakers:

Rt Hon Anna Soubry MP, Minister for Small Business, Industry and Enterprise (invited)
Andrew Cumpsty, Chairman, Enterprise Forum (Chair)
Terry Scuoler, Chief Executive, EEF
Esther McVey, Founder, Winning Women

Economic Policy Group meet with BIS Permanent Secretary

EEF members met Martin Donnelly, Permanent Secretary at the Department for Business, to make the case for stability of government programmes that are enablers of business investment in an increasingly uncertain economic environment. The discussion from members echoed the messages to government in EEF’s Spending Review recommendations, which were submitted to HM Treasury this week.

In particular, debate concentrated on the implementation challenges for the proposed apprenticeship levy and the uncertain impact on outcomes, the important role that UKTI and Innovate UK programmes have in enabling business growth in the UK. The importance of good communication about the future of the government’s Industrial Strategy was also stressed. EEF will continue to make these recommendation to officials and Ministers in the run up to the Spending Review announcement.

For more information contact Lee Hopley, Chief Economist

Roundtable dinner with Financial Times Political Editor

EEF hosted a roundtable dinner for its Government Affairs Group with George Parker, Political Editor of the Financial Times. With the new parliament in full swing and a number of big political issues on the horizon, such as the election of a new Labour party leader and the ongoing EU renegotiation, this provided an opportunity to discuss key themes affecting industry. Of particular note during the discussion was the Spending Review and the potential impact of the government’s apprenticeships levy proposal – key issues that EEF will continue to discuss with senior ministers and officials in the coming weeks.

For more information contact Rocky Lorusso, Head of Government Affairs

EEF attends Energy and Climate Change Select Committee Forum

EEF attended the Energy and Climate Change (ECC) Select Committee’s first consultative stakeholder forum, chaired by the ECC committee chair Angus MacNeil. The forum followed on from the committee’s recent call for evidence for priorities for the Select Committee. There was a wide range of views, but the need for stability and certainty in future energy policy, securing investment in future energy infrastructure and supply, and the need for a new energy efficiency framework were consistent themes. EEF will continue to engage with the Select Committee and politicians with an interest in these key issues affecting manufacturers.

For more information contact Richard Warren, Senior Energy and Environment Policy Adviser

EEF meets with new Labour MP for Aberavon

EEF met with the new Labour MP for Aberavon Stephen Kinnock, as part of its ongoing engagement with new MPs from all parties. We briefed Mr Kinnock on manufacturers’ priorities around industrial strategy and productivity. Aberavon and the surrounding area has a large manufacturing base and EEF will continue to meet and brief new MPs with a particular interest in the sector and with a strong manufacturing base in their constituency.

For more information contact Paul Raynes, Policy Director

Devolution on the agenda with Coventry North West MP

As part of our ongoing engagement with MPs on English regional devolution, EEF met the Labour MP for Coventry North West, Geoffrey Robinson. We briefed Mr Robinson on manufacturers’ priorities around devolution and local growth, specifically in the context of Coventry and the West Midlands. Over the coming weeks EEF will be briefing other MPs with a particular interest in English regional devolution as the Cities and Local Government Devolution Bill returns to Parliament.

For more information contact Christopher Richards, Senior Business Environment Policy Advisor.

EEF submits Spending Review submission to Treasury

This week EEF submitted its recommendations for the Chancellor’s Spending Review, which will be announced on 25th November. The Spending Review will be the first of the new Conservative Government’s, and set out expenditure limits and budgets for governmental departments. EEF will make public the content of its submission in the coming weeks and will meet with new government figures ahead of the Spending Review to ensure manufacturers’ needs are represented.

For more information contact Paul Raynes, Policy Director

In Scottish Parliament

EEF’s Manufacturing Outlook report was referenced in debate on the Scottish economy by Margaret McCulloch MSP.

In the media

The quarterly EEF/DLA Piper Manufacturing Outlook report generated widespread coverage in The Times (£), The Financial Times (£), The Daily Telegraph, The Guardian, The Independent, The Daily Mail, BBC News and Sky News. Chief Executive Terry Scuoler was interviewed on BBC News and BBC Radio 5 Live, and Chief Economist Lee Hopley was interviewed on Sky News.

The latest ONS figures, which showed a 08.% slide in manufacturing, generated further coverage for Manufacturing Outlook in The Financial Times, The Independent and The Daily Mail.

For more information contact Sophie Carroll, External Affairs Executive

Week in review

Index of production

Production output decreased by 0.4% in July 2015 compared with June 2015, largely driven by a 0.8% fall in manufacturing output.

UK Trade

ONS statistics show that the UK’s deficit on trade in goods and services was £3.4bn in July 2015, having widened £2.6bn compared with June 2015. This widening is attributed to trade in goods where the deficit increased from £8.5bn in June 2015 to £11.1bn in July 2015.

The week ahead

15th Sept: Inflation
16th Sept: Labour market statistics

Blogs from this week

07 Sep 2015
Headlines from EEF/DLA Piper 2015q3 Manufacturing Outlook survey - Lee Hopley shares 5 key facts from our latest Manufacturing Outlook survey.

07 Sep 2015
Week Ahead - EEF's Deputy Chief Economist takes a look at the week ahead.

08 Sep 2015
EEF's manufacturing sector forecasts for 2015 - Lee Hopley discusses which sectors are on track for growth this year?

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