Economic Update 2nd November 2011
GDP at 0.5%
July, August and September saw 0.5% growth, suggesting the UK economy is continuing to flatline following a 0.1% increase in gross domestic product (GDP) in the previous quarter.
Transport, storage and communication saw a 0.9% increase in growth compared to near stagnation in the previous three months. The sector increased by a more impressive 1.9% between the third quarter in 2010 and quarter three this year.
Construction sector output fell by 0.6% in July, August and September, compared to an increase of 1.1% in the previous quarter.
Looking at the global picture, the sluggish state of the UK economy is part of the reason why commentators are predicting that 2011 will see Brazil take the UK’s sixth place slot in the league table of the world’s largest economies. Currently leading UK are the US, China, Japan, Germany and France.
The Economist Intelligence Unit predicts that by 2020, India and Russia will also have grown bigger than the UK, which by then will be in ninth position.
http://www.ons.gov.uk/ons/dcp171778_238651.pdf
http://www.bbc.co.uk/news/business-15535518
Rules on unproductive workers to change
Deputy Prime Minister Nick Clegg has announced that the Coalition will soon introduce a package of new laws aimed at reducing inspection visits to businesses and allowing unproductive workers to be moved on without the fear of employment litigation.
One proposal will be to allow "protected conversations" so staff will not be able to use them against their employer later.
Clegg said, "Employers tell us they're afraid to have frank discussions with staff.. or fear of those exchanges being used against them unfairly, should a dispute end up at tribunal........
We want to give them the confidence to be open about performance, about retirement with their employees. If you speak to many employers, they value older workers massively. I don't think there is some sort of in-built prejudice against older workers at all."
The Deputy Prime Minister went on to say that he also wanted to encourage a ''culture change'' in bodies like the Health and Safety Executive, Environment Agency and HM Revenue and Customs, so that economic growth becomes more of a priority in these organisations.
Clegg said,''Why can't we limit the number of inspections to, say, two a year, ensuring these bodies coordinate amongst themselves to stick within that limit? .......................We will put pressure on them, if they don't prove their worth, if they're not fulfilling an obvious and objectively justified role, they'll go.”
http://www.telegraph.co.uk/finance/jobs/8848487/Older-and-underperforming-workers-face-sack.html
European freight on the way up
Research from Transport Intelligence (Ti) identifies a continuing if slow improvement in both economic activity in the EU and road freight output after the crash of 2009. Ti says there has been stable, but low growth in the road freight sector in 2010 and 2011.
However, there is a warning that the improving trend is influenced by stronger economic growth in northern Europe and Germany in particular. There is also speculation that growth may be linked to the success of larger companies taking market share from SMEs.
The Ti report European Road Transport and Logistics 2011 also looks at developments which have an impact on haulage operators such as fuel costs, congestion and competition from Eastern Europe.
More government help for banks to kick-start SME lending
The Governor of the Bank of England, Sir Mervyn King, has called for banks to be given "fiscal incentives" to lend to small businesses. The suggestion was made as fears grow that the global financial system could be on the brink of another credit crunch.
Last week King told the Treasury Select Committee that more taxpayer support for banks might help stimulate more business lending. The Governor told the Committee that the current programe of quantitive easing (printing money), which aims to pump £75 billion of new money into the system, might not be enough on its own to get growth going.
However the idea that already bailed out by banks might be given more taxpayer support caused anger amongst some commentators.
http://www.guardian.co.uk/business/2011/oct/25/mervyn-king-bank-incentives-lend