Tory peer Lord Harrington’s Treasury-commissioned report into the UK’s dismal foreign direct investment (FDI) says Brexit isn’t the cause of our economic woes. Instead, Harrington finds that the civil service’s perpetual instinct to do “anything to de-risk a decision“, particularly by “shoving financial decisions to a series of semi-arms length institutions” is to blame. Endless bureaucratic delay does not an attractive place to invest make…
The report finds “competitors have about 12% of GDP in business investment both domestic and foreign, our equivalent is 10%” – that amounts to £50 billion annually. Meanwhile, new figures show the UK business death rate has exceeded the birth rate for the first time since 2010. Over 200 banks, businesses, and wealth funds have spoken to Harrington to complain about the lack of willingness and expertise in the government when it comes to getting new business. The report is calling for a new “Investment Minister” to lead a “business investment strategy“. Never mind another strategy, how about they get out of the way…
For all the anticipation about tax cuts and briefings on a possible inheritance tax scrappage, it looks like none of that’s coming anytime soon. Guido hears the Autumn Statement will be free of major retail measures on tax thanks to, as Hunt keeps reminding everyone, a distinct lack of “fiscal headroom“. Too bad that headroom keeps increasing…
Calls for tax cuts from businesses have been fended off by endless think tank warnings about their imaginary dire consequences. It looks like Hunt’s team have been spooked enough to listen. It is also rumoured that any major fiscal measures altogether are getting pushed back to the Spring Budget when Hunt’s hoping to unveil his “retail offer” for the election. Backbenchers are already restless, this won’t help…
The ONS have released GDP numbers for the third quarter this year – a fat zero. The economy keeps flatlining as decreases in the service sector cancelled out minor growth in construction activity. GDP actually fell by 0.03% in Q3, though the ONS has rounded that out…
Markets were actually expecting a 0.1% decrease in Q3 and no one is predicting meaningful growth will return in the near future. Meanwhile, an extra 1.2 million people are getting dragged into the claws of HMRC through savings rates. HMRC are complaining they don’t have enough resources to cope. Guido can think of a few tax cuts to ease their burden…
New figures from the UK Insolvency Service show company insolvencies have reached their highest level since 2009, when the global economy was in meltdown. Insolvencies in Q3 this year were 10% higher than last year – 37,722 companies were in “critical financial distress” and 480,000 were in “significant” distress. Meanwhile Hunt’s dangling spectral tax cuts ahead of the Autumn Statement and refusing to extend full expensing for companies…
Construction and real estate sectors have taken the strongest hit, with services and wholesale & retail trade behind. The number of creditors’ voluntary liquidations has reached levels not seen since the 1960s when data was first collected. Death by a thousand bankruptcies…
Much to the relief of Rishi Sunak and the second of his five pledges, the UK economy grew by 0.2% in the second quarter of 2023. According to figures published today by the ONS, this came off the back of a solid 0.5% growth in the month of June – which was mainly down to 1.5% growth in the production sector. The latest update leaves the economy performing better than expected, after the Bank of England pencilled in 0.1% growth for the quarter.
With the economy now (barely) growing and inflation showing signs of slowing, the prospects of the Prime Minister’s pledges are looking better than just months ago. Though, debt is still up, waiting lists are at a new record high and the boats aren’t stopping. All eyes now on the all-important inflation stats, due for publication next week…
The new Manufacturing Outlook report from Make UK and BDO for the first three months of 2023 shows plenty of welcome optimism in the manufacturing sector, with a sharp uptick in confidence, investment and output compared to the last quarter. BDO’s Head of Manufacturing, Richard Austin, even dares to talk of the “the green shoots of growth beginning to take shape“. Albeit with enough caution to save face…
The data shows improved performance across the board for the sector:
“Both Employment and Investment Intentions increased on balance compared to last quarter. The improvement in the latter metric is particularly interesting as manufacturer’s confidence in investment plans had recently hit negative balances just one quarter ago […] Investment Intentions increased from -5% to +14% as growing order books, supply-chain disruption easing, and cooling inflation has allowed businesses room to focus on the future and less so on short-term issues.
Both business confidence and UK economy confidence improved this quarter. This was due to improvements in most UK nations and regions who are feeling slightly more positive about the next twelve months, except for the West Midlands which reported a marginal decline (despite remaining overall more positive than negative about the future).”
Manufacturing output balance increased to +21% over the last three months, with it forecast to rise to +32% over the next quarter. Similarly, the total orders balance has shot up to +28%, up from +6% in Q4 2022. Confidence is returning, orders are rising, and investment remains strong. Finally, some good news…
Read the full report below:
