Economic Update 27th July 2011
Increased freight traffic boosts Eurotunnel profits
The first half of 2011 saw a 21% increase in the number of trucks using Eurotunnel together with a 16% rise in freight trains. These positive figures helped the company’s underlying profits rise by 37% to €189 million. The first half of 2011 saw truck numbers reach 609,000.
1 million trucks used the tunnel in 2010.
In the first six months of 2011, the number of Eurostar passengers was up 3%, but car traffic dropped 2%. It is suggested that this fall is due to business and holiday traffic being affected by the economic climate.
John Keefe of Eurotunnel told the Scotsman, "people are not travelling as much as before. The economic situation is weighing a bit on the market and the euro is expensive now. With the euro crisis, the instability is playing on the minds of the British a bit too. The market is not growing as it was two or three years ago."
http://business.scotsman.com/business/Eurotunnel-sees-profits-jump-3737.6806084.jp
http://www.thisisnottingham.co.uk/Tunnel-way-travel/story-12988726-detail/story.html
http://www.ifw-net.com/freightpubs/ifw/rail/50-million-turnaround-by-eurotunnel/20017890540.htm
http://www.lloydslist.com/ll/sector/ports-and-logistics/article375834.ece
GDP slides to 0.2%
The UK economy grew by only 0.2 % in the second quarter of 2011. This means that the economy has decelerated from the 0.5% growth in gross domestic product (GDP) found in the first quarter of 2011. There was a 0.5% contraction in the economy in the last three months of 2010, so over all the UK economy is stagnant.
There is some speculation that factors such as the additional April bank holiday, the royal wedding and the after effects of the Japanese tsunami all contributed to slowing growth.
However, transport, storage and communication did slightly better with an increase of 1.1%, compared to an increase of 2.5% in the previous quarter. Land transport contributed most to growth in this quarter.
Manufacturing decreased by 0.3% compared with an increase of 0.7% in the previous three months. Mining and quarrying decreased by 6.6%, compared with a decrease of 1.8% in the previous quarter.
The BBC reports average forecasts for UK growth of 1.3% in 2011. In comparison the United States is expected to grow by 2.5%, Germany by 3.4% and France by 2%.
http://www.statistics.gov.uk/cci/nugget.asp?id=192
http://www.bbc.co.uk/news/business-14288348
Cost of small business loans set to rise
According to the Bank of England the cost of credit to small businesses is likely to rise over the next quarter. On top of this prospect, the Bank says that big businesses can now access credit if they need to, whereas for small firms the availability of loans is variable. The Bank also found that larger and medium-sized businesses were offered lower cost credit than smaller operators.
John Walker of the Federation of Small Businesses said, “once again the smallest of businesses are losing out. It is very bad news that the volume of lending to small firms fell – despite evidence that there was a marked increase in demand for finance from the smallest of businesses......Until there is more competition in the banking sector, this practice will continue and that no amount of lending targets will improve the situation.”
http://www.bankofengland.co.uk/publications/other/monetary/TrendsJuly11.pdf
14K a year Red Tape cost to small businesses
Complying with red tape costs small businesses £14,200 on average according to a survey from the Forum of Private Business (FPB). On top of this 84% of the survey group reported that the cost of regulation had risen, on average by 1% since 2009 and those responding also said that they were spending more time on dealing with regulations than in 2009.
Speaking to the Telegraph, Jane Bennett, the FPB's head of campaigns, said, "despite several government initiatives – some more effective than others – it is clear that we are heading in the wrong direction as far as reducing regulation for small business owners is concerned." Bennett also pointed out that the costs of compliance with red tape appeared to be increasing at a time of reduced economic activity.
Transport trades unions to merge
Merger talks have been started by the Rail Maritime and Transport union (RMT) and the Transport Salaried Staffs’ Association (TSSA). TSSA represents 30,000 administrative, managerial, professional and technical workers on the railways, the London Underground, and at the ports and ferries, and in the travel industry. The RMT has 80,000 members who work in the road freight sector, shipping as well as offshore, and on the buses, railways and underground network.
The two unions will also consider approaches from other specialist transport unions wanting to consider merger.
http://www.logisticsmanager.com/Articles/16549/Transport+unions+in+merger+talks.html
North-south divide on skills and employment
The West Midlands along with Yorkshire and the Humber have suffered the biggest increases in UK unemployment since 2005 according to research looking back over the last few years, from the Office for National Statistics. The smallest rises in joblessness were in the South East, the East of England and London. Joblessness was also slow to increase in the South West.
Average UK unemployment is now at 7.7%. The North East region has the highest rate of joblessness currently at 9.8%, with the North West and Yorkshire and the Humber at 8.6%. The West Midlands is at 8.5%. The lowest level of unemployment can be found in the South East where the figure is 5.7%, followed by the East of England at 6.5% and the South West at 6.4%. London by contrast has a current rate of 9.3%.
In a separate study the West Midlands has been identified as having the poorest levels of educational attainment with many parts of the region home to a large proportion of adults with no qualifications. Glasgow North East, however had the highest concentration overall of people with no qualifications at 35%. The average in Britain is 11.3% of the population with no qualifications. The University and College Union has found that many of the areas with the highest proportion of qualified people are in the south, with Brent North in London having only 1.9% of its population without qualifications. However many other London areas, particularly to the east of the capital had low qualification levels.
Ed Stansfield of Capital Economics told the BBC, "one-third of all jobs created since the end of 2009 have been in London and three-quarters of all jobs created have been in London, the South East, South West and in East Anglia."
On top of this the north is falling behind in terms of workforce skill levels, business start-ups, investment in transport, as well as in science and technology according to findings of the think tank the Institute for Public Policy Research reported in the Financial Times.
http://www.statistics.gov.uk/cci/nugget.asp?id=397
http://www.ft.com/cms/s/0/9e874afa-b2b4-11e0-bc28-00144feabdc0.html#axzz1Sph0Yhut
http://www.bbc.co.uk/news/education-14233114
http://www.bbc.co.uk/news/uk-england-14247229