Q3 UK GDP growth revised up and latest QES points to solid growth in Q4.
Higher inflation and uncertainty over Brexit likely to weigh on UK’s growth prospects.
US Federal Reserve raises interest rates and further rises are likely in the coming months.
UK growth was revised upwards with a recorded growth of 0.6% against an estimate of 0.5%. The upwards revision was driven by stronger business and financial services output. The latest Quarterly Economic Survey showed that both the manufacturing sector and the service sector increased. There results suggest that the UK economy grew in line with historic trends.
UK inflation continues to rise, with prices of clothing and motor fuels being the main contributors to this rise. The outlook for UK growth remains weak, with continued uncertainty over Brexit weighing down future growth prospects.
The US Federal Reserve raised interest rates by 0.25 percentage points to a target range of 0.5% and 0.75%. This is the first increase since December 2015. Further rises in US interest rates are expected in the coming months which will place further downward pressure on the value of Sterling.
HM Revenue & Customs (HMRC) has awarded Harwich International Port Authorised Economic Operator (AEO) status.
The authorisation recognises, HMRC explained, the high standards achieved and maintained in relation to the movement of goods and the application of customs procedures.
AEO status is an internationally recognised quality mark indicating that an operator’s role in the international supply chain is secure, and that its customs controls and procedures are efficient and compliant.
The AEO regime operates under the EU’s Union Customs Code and is administered in the UK by HMRC. AEO status gives quicker access to certain simplified customs procedures and in some cases the right to fast-track shipments through some customs procedures.
General Manager of Harwich International Port, Daren Taylor, said: “The AEO application procedure is extremely thorough and this certification provides an assurance to shippers that procedures at Harwich are of the highest standard. AEO accreditation can help simplify administrative procedures for goods being moved internationally and helps remove risk from supply chains.”
Felixstowe was the first UK port to receive full AEO status in September 2014.
Similar to last year, Lulu Hypermarkets, a large UAE based supermarket,are looking for new British products for showcasing at their Best of British Festival in April this year.
Lulu puts on a Best of British Festival every year, which runs for 10 days usually in April or May. During the festival they showcase and highlight all the British brands they already stock, along with new products which they procure just for this festival. Depending on sales/demand, those new products then get an opportunity to continue supplying to Lulu even after the festival.
Last year, 100+ UK companies were introduced to them, out of which they selected products of 18 companies which were showcased at their festival. They are now placing regular orders with a handful of those 18 companies.
The plan is similar for this year’s festival. They want us to source out new UK companies, which they haven’t dealt with before, to get their products stocked at Lulu Hypermarkets in time for the festival.
Below is the criteria you would need to meet:
Categories interested: free from products, organic, healthy foods Type of companies: manufacturers only – no consolidators, distributors or any other intermediaries Note: Companies shouldn’t be already supplying to Lulu Hypermarkets in Dubai (either via Y International, other consolidators or UAE distributors).
If you wish to put your name forward forthis great opportunity, please send us an email. Deadline for all applications is 31 January 2017.
The British Chambers of Commerce (BCC) today (Thursday) publishes its Quarterly Economic Survey – the UK’s largest and most authoritative private sector business survey. Based on 7,250 responses from companies in Q4 2016, the results show the uptick in Q3 in the manufacturing sector has been sustained in the final quarter, and more service sector firms were expecting growth than they were just after the EU referendum.
Overall, the findings suggest growth in Norfolk will continue in 2017, albeit at a more modest pace.
The survey results show that having slowed in Q3 2016, growth in Norfolk’s domestic sales and orders rose considerably in the service sector for Q4, although they have not bounced back to the levels last seen in 2013. The fall in Sterling looks like it is benefitting some manufacturers, with export sales and orders continuing the rise started in the last quarter. Manufacturing exporters started 2016 in negative territory, with export order balances at -8% but they finish 2016 in a very positive position, with an export order balance at +22%.
The survey also indicates that manufacturer’s confidence in future turnover and profitability has continued to increase throughout the year. Balances for hiring expectations and investment in plant and machinery also rose this quarter, again highlighting growing confidence for Norfolk’s manufacturing firms.
Norfolk’s service sector have not been as confident through 2016. They started the year with a negative balance for export sales (-3% in Q1) and the negative balances lingered throughout the year, dropping further to -12% in Q3, but finished stronger in Q4 with a positive balance at +11%. Turnover and profitability for the Norfolk Service sector also finished positively with turnover at +35% and profitability at +20%. Both of these balances are at lower levels that they were in Q1 2016 (+55% and +41% respectively).
However, the survey found that firms in both sectors, particularly in manufacturing, are facing pressure to raise prices, principally as a result of the cost of raw materials and other overheads.
Commenting on the results, Caroline Williams, Chief Executive of Norfolk Chamber of Commerce said:
“As we start 2017, Norfolk businesses are continuing to trade through uncertainty, and are looking to seize opportunities as they arise. The QES findings suggest that business communities across Norfolk and the rest of the UK remain resilient, and many firms are expecting continued growth in the months ahead.
“Inflation has emerged in our survey as a rising concern for many businesses. Both manufacturing and services firms say they are under pressure, particularly from the rising costs, which are squeezing margins and may weaken future investment. “It is therefore vitally important that our local Councillors, together with our MPs, work hard on our behalf to bring investment into our County to help improve the business environment in order to encourage business growth.”
Key Norfolk findings in the Q4 2016 survey:
Overall, the figures for both sectors indicate continued expansion, but at a lower level for the services sector than before the EU referendum
There was a considerable rise in the balance of firms in both sectors expecting the prices of their goods and services to increase over the next three months, with the balance for manufacturers rising from +29% to +55%. This is the highest on record in the manufacturing sector, and the highest since Q2 2011 for manufacturing firms. This pressure is predominately as a result of an increase in raw material prices following the post-referendum devaluation of Sterling
In the manufacturing sector, the balance of firms reporting improved export sales remained broadly steady, slightly increasing from +13% in Q3 2016, to +18%. The balance for export orders is +22%, a rise from +13% in the previous quarter. Both balances have shown a marked increase from the same quarter last year, where they both languished in negative territory (orders at -3% and sales at -8%)
Domestically, the balance of manufacturers reporting increased sales rose from +7% to +24%, and those reporting increased advance orders rose by 10 points to +10%. The balance for services firms rebounded slightly, after falling considerably in the last quarter. Domestic sales were up from +10% to +24% and orders rose from +0% to +20%.
The percentage of manufacturing firms reporting recruitment difficulties decreased from +86% to +78%. Whilst the service sector recruitment difficulties increased from +55% to +68%.
In the last three months, the balance of service sector firms hiring more staff rose from +9% to +19%, although manufacturing firms reported only say a slight increased from +32% to +34%.
Having dipped in the last quarter, the manufacturing sector are reporting higher balances of firms investing in plant and machinery, with an increasing balance from +13% in Q3 to +27% this quarter.
More firms in both sectors are reporting confidence that their turnover will increase. The balance of manufacturers rose from +39% to +63%, while services increased from +28% to +35%. While confidence in profitability also rose from +13% to +52%, it rose from +6% to +20% in the services sector.
Commenting on the National results, Suren Thiru, Head of Economics at the BCC, said:
“Having slowed significantly in the previous quarter, the UK services sector has rebounded, although it’s not yet back to levels seen at the start of the year. Nonetheless, the service sector is likely to have been the key driver of growth in the quarter.
“Manufacturers, particularly those that export, continue to report positive indicators. However, while some firms will be benefitting from the depreciation in the value of the pound, there is currently little evidence that it is providing a material boost to overall export growth. The UK’s manufacturing base continues to struggle with long-term structural issues, with businesses continuing to report considerable recruitment difficulties. The government must work to address the skills gap, while also ensuring that businesses have access to the workers they need from overseas.
“There is further evidence that rising prices will be a key challenge to the outlook for the UK economy over the next year, with the significant rise in the cost of raw materials increasing the pressure on firms to raise prices in the coming months. While growth is likely to have remained on trend in the quarter, the UK’s growth prospects in the near-term are expected to be more subdued, weighed down by rising inflation and the uncertainty surrounding Brexit.”
Get the New Year off to a great start and make the most of your Chamber membership with some valuable business networking. Meet up with other members, share business knowledge and interests, strengthen current business relationships and establish new ones.
Norfolk Chamber runs successful networking breakfasts in Norwich, Great Yarmouth and West Norfolk with guest speakers, networking activities and a delicious breakfast.
If early mornings aren’t your thing, we run fun evening networking such as our Superbowl Challenge on 26th January as well as cocktail evenings and fashion shows throughout the year.
The date for this year’s premier business to business exhibition is Thursday 12 October 2017. The B2B Exhibition takes place at Norwich City Football Club across two floors and last year had 750 visitors with over 90 stands. Early bird discount now available on stands.
More interested in content than making connections? Why not join us for some valuable business training on social media, finances or marketing. We also offer free bitesize training ‘Chamber Sessions‘ exclusively for our members.
Don’t forget to check out our member’s directory we have over 900 members in total, you can search by industry and location to find the right business to work with.
A huge congratulations to our Chief Executive, Caroline Williams for being awarded a MBE in the Queen’s New Year’s Honours List for services to the Norfolk business community.
The chief executive of Norfolk’s chamber of commerce for almost 17 years has been made a Member of the British Empire. Mother-of-two Caroline Williams, who lives in Salhouse, said she was “thrilled and humbled” to receive the accolade. The 64-year-old joined the chamber in 2000, having previously worked as an international buyer and an account manager in Dereham.
At that time, she said the organisation had been “limping along” and was in a poor state financially. But over the following years, Mrs Williams, assisted by fellow members, transformed the chamber into a strong and sustainable position.
“I think one of the biggest achievements is that Norfolk’s business community is now visible in Westminster,” she said. “It understands that it can make a difference, and the chamber has worked as a good facilitator between the Government and the business community.”
The title is a among a string of accolades Mrs William has picked up this year. As well as becoming a qualified yoga teacher, she also received the EDP Outstanding Business Award. She will be stepping down from her role in April to focus on training business leaders across the county.
Read more about Norfolk Heroes recognised in the EDP here
Last month, the European Commission invited comments on its plans to enter into negotiations to update the EU-Mexico free trade agreement (FTA).
Now, as part of its commitment for a more transparent trade policy, it has published six initial European proposals for modernising various elements of the agreement. It has also made available a report on the round of talks that took place in Mexico between 22 and 25 November.
EU Trade Commissioner Cecilia Malmström explained: “Sixteen years have passed since the current EU-Mexico became effective. Today we need to adapt it to a new trade reality. We’ve had some good initial talks with our Mexican counterparts but to reach a good agreement we also need constructive engagement from interested parties.”
Since the existing EU-Mexico agreement entered into force in 2000, EU-Mexico trade in goods has increased by 180% and amounted to €53 billion in 2015.
The texts presented by the EU in the latest negotiations aim to increase participation of European companies in Mexican public tenders, and vice versa, and to increase co-operation on imports requirements related to food safety, plant and animal health.
The Commission is also keen to facilitate trade in energy products and raw materials and to define more flexible rules of origin (establishing what products can benefit from lower customs tariffs).
More generally, the proposals seek to reduce unnecessary regulatory barriers to trade and to increase the part of trade benefits that go to small companies.
Whether or not a country is granted Market Economy Status (MES) by the EU sounds like a rather arcane economic argument but it can, in fact, have a huge impact on that country’s exports.
This is because MES is used to calculate anti-dumping measures when the EU decides to take action against a country, which it believes is helping exporters to sell into the EU market at unrealistically low prices.
If an exporting country is not accepted as having MES, in other words if its costs and prices are not market based, then it will face much higher anti-dumping duties as the European Commission seeks to protect European industries from unfair competition.
China has been pushing for MES from the EU for some time and its patience seems to have run out as it has now turned to the World Trade Organization (WTO) for redress.
It has opened a dispute process at the WTO with regard to both the EU and the USA, claiming that both use unfair “calculation methodologies” in anti-dumping proceedings.
When China joined the WTO, existing members were given a 15-year period during which they could treat it as a non-market economy if dumping duties had to be calculated. However, that period ran out on 11 December 2016 and China has wasted no time in demanding that it be granted MES.
It was reportedly angry that the EU had imposed anti-dumping duties on its steel products, still treating it as a non-market economy just a few weeks before the WTO’s deadline. China described this decision as protectionist.
Under WTO rules, the parties to a dispute must discuss the matter and try to find a satisfactory solution without proceeding further with litigation. Only if consultations have failed after 60 days can the complainant request adjudication by a WTO panel.
The BCC and TUC have put together a joint letter to the Prime Minister urging her to end uncertainty around the status of existing EU nationals, and give current EU employees a right to remain after Brexit.
Supported by a long tradition of harmonious trade, Portugal has more recently become recognised as a country where English is widely spoken and has proven to be a hotbed of creativity and entrepreneurialism.
What can the BPCC do for you and your local members?
As a bi-lateral Chamber our interests lie not only in promoting British exports overseas, but also supporting our Portuguese companies to identify and develop opportunities in the UK. Our local knowledge is an invaluable asset for British businesses needing in-depth research, introductions to the most appropriate service provider, translations or explanations of specific legislation. We collaborate closely with other business agencies, such as UKTI (now DoI), by providing “landing services” for visiting trade missions. Similarly, we are keen to expand our partnerships with British Chambers of Commerce to organise one-to-one meetings with your members for our visiting delegations of Portuguese missioners.
We currently have companies actively seeking to participate in joint ventures and bid for contracts relating to major infrastructure projects, especially the Northern Powerhouse. A further example is a nationwide commercial cleaning company with a desire to establish a representation for robotic cleaning equipment. These are just mere examples – the possibilities are endless.
Each year we take dozens of Portuguese exhibitors to trade shows in the UK; they are particularly strong in the food and drink sectors; construction; sustainability and renewable energies; textiles, shoes, furniture and moulds. The British fashion and home furnishing sectors regard Portugal as a very important source and we regularly introduce buyers to production facilities.
It seems a long time since George Osborne spoke of “a Britain carried aloft by the march of the makers” (it was in fact his 2011 Budget) and the latest official report suggests that the sector is still lagging behind rather than carrying the economy forward.
Figures from the Office for National Statistics (ONS) show that manufacturing fell by 0.9% and production fell by 1.3% between September and October this year.
This was described by Lee Hopley, Chief Economist at EEF, the manufacturers’ organisation, as a fairly hefty contraction and she said that it was certainly not the start to the fourth quarter that the industry expected to see.
“Output falls appear fairly widespread across subsectors,” she explained, “but falls in pharmaceuticals, textiles and food were responsible for much of the drop over the month.”
TUC General Secretary Frances O’Grady was also disappointed by the latest figures which were, she suggested, a reminder of the challenges ahead next year, especially in the light of Brexit.
“When the manufacturing sector grows, it creates good jobs across the whole of the UK. So support for the sector should be a bigger priority for the government as part of a more comprehensive industrial strategy in 2017,” she went on.
The current Chancellor had said the right things about higher investment in the Autumn Statement, Ms O’Grady argued, but failed to back his words with a sufficiently robust investment package.
On a more positive note, Ms Hopley highlighted underlying resilience in the domestic market and a brightening outlook overseas as reasons for optimism.