Expert comment on the independent review of UK economic statistics and the ONS

Comment on the independent review of UK economic statistics and the ONS Ana Galvao, of Warwick Business School, is an associate professor of economic modelling and forecasting and associate editor of the International Journal of Forecasting.

Ana Galvao said:
“It is clear in the interim report that the distance to London reduces the communication links between the supplier of data statistics (ONS) and the main users (government departments and the Bank of England). However, there is no evidence in the interim report that the quality of GDP growth data has deteriorated since 2007.

“The report shows first and current estimates of GDP growth from 2008, but there is no evidence that the revisions during the 2008-2012 period are indeed larger than in the previous five years (2002-2007) or during the turbulent period in the beginning of the 1990s.

“The report includes only a very limited comparison of the size of UK GDP growth data revisions with other countries, and some comments are based on academic papers published almost 10 years ago. I hope to see a more extensive analysis of recent UK GDP data revisions in the final report by Sir Charlie Bean. They will be useful to understand the impact of the ONS relocation on the quality of UK GDP data.”

RSM’s UK revenues up by over a quarter while post-tax profits rise by over 50%

Audit, tax and consulting firm RSM (formerly Baker Tilly) today announced a 26% growth in UK annual revenues to £292m for its 2015 financial year ending 31 March.

Consolidated UK company profits grew by 52% to £19m, while profits of RSM UK Group LLP rose by 39% to £45m. In addition, the average Group LLP partner (member) profit rose by 10% to £362k.

The results are the first to be published since the firm adopted the RSM name in October 2015, uniting it under a single common brand with RSM audit, tax and consulting firms around the world.

The figures also reflect a full year’s contribution to revenues and profits of the former Tenon business acquired in September 2013.
All service lines showed double-digit growth:

– Tax and advisory grew by 10% to £121m
– Audit and assurance grew by 15% to £76m
– Restructuring advisory grew by 69% to £44m
– Risk assurance grew by 86% to £22m
– Corporate finance grew by 29% to £21m
– Consulting – currently the firm’s fastest growing service line – grew by 195% to £8m.
Laurence Longe, RSM’s UK managing partner, said:
“This year’s record financial results for the firm show not only the full impact of the absorption of the former Tenon business, but also reflect underlying organic growth in multiple revenue streams following the successful completion of the strategic restructuring of the firm.

“The major structural developments of the last two years, along with the recent highly successful launch of our new global brand have laid the foundations for RSM to truly become the first-choice adviser to middle market leaders, globally.”

Farmers warned of targeted fraud attacks

Farmers are being warned to be extremely wary of any suspicious calls, texts or emails as fraudsters specifically target the agricultural sector when EU grant payments begin to arrive in bank accounts next month.

From December, farmers start to receive large funds through the Basic Payment Scheme (BPS), the European Union’s main rural payments scheme.

Information about the payments, including the recipients’ names and the amount paid, is publically available, meaning criminals are able to target directly victims and make their approaches appear more convincing.

The scam communications will typically claim that fraud has been detected on the farmer’s bank account and that urgent action is required to safeguard funds. The victim is then persuaded to divulge personal or financial information, or even to transfer money directly into a so-called ‘safe account’.

With some grants worth hundreds of thousands of pounds, in past years fraudsters have stolen significant amounts of money from their victims. As well as farmers, other organisations which use farm land also receive BPS funds.

Tony Blake, senior fraud prevention officer at the Dedicated Card and Payment Crime Unit, said:
“Criminals are well aware of when these annual payments start to arrive and will look for any opportunity to defraud their victims. It is vital that farmers, and other recipients of the payment, are alert to these scams and are very wary of any phone calls, texts or emails out of the blue asking for personal or financial information, or to transfer money to another account.

“If you receive such a call or message, hang up the phone and do not reply directly. Instead, wait five minutes and ring your bank to alert them to the scam, using a phone number that you trust – such as the one from the official website.”

Advice on how to avoid this type of scam:
Be wary of:
• Any calls, texts or emails purporting to be from your bank, the police, a Government body or other organisation asking for personal or financial details, or for you to transfer money.
• Cold callers who suggest you hang up the phone and call them back. Fraudsters can keep your phone line open by not putting down the receiver at their end.
• Any request to check that the number showing on your telephone display matches an organisation’s registered telephone number. The display cannot be trusted, as the number showing can be altered by the caller.

Remember:
• You will never be asked for your 4 digit PIN or your online banking password, or for you to transfer money to a new account for “fraud reasons”.
• If you receive a suspicious call, hang up, wait five minutes to clear the line, or where possible use a different phone line, then call your bank or card issuer on their advertised number to report the fraud.

Never disclose your:
• Four digit card PIN to anyone, including the bank or police.
• Your password or online banking codes.
• Personal details unless you are certain you know who you are talking to. People are not always who they say they are.

Investment in manufacturing robotics could boost British economy by £60bn within a decad

Investing an additional £1.2bn into manufacturing processes, to increase robotics and automation over the next decade could add as much as £60.5bn to the UK economy over the next decade, forecasts new research from Barclays. This is equivalent to nearly two fifths of the manufacturing sector’s value to the economy today.

The ‘Future-proofing UK manufacturing’ report reveals that investing in automation technology will help to increase the international competitiveness of the UK’s manufacturing sector through increased manufacturing productivity and efficiency. As a result of additional investment, the manufacturing sector will be worth £191bn in 2025, £8.6bn more than currently projected and a 19.6% increase on today.

Furthermore, increased investment in automation will help to soften the expected long-term decline in manufacturing sector jobs by safeguarding 73,500 additional workers in 2025, due to the creation of a larger, more productive and competitive UK manufacturing sector.

In addition, 32,300 more jobs will be supported elsewhere in the economy through the generation of more business in the supply chain, from raw materials through to logistics, as well as the effect of workers spending more widely in the economy. In 2025 alone this is forecast to represent an additional stimulus worth £3.9bn.

Mike Rigby, head of manufacturing, Barclays said:

“This report highlights the importance of investing in robotics and automation for manufacturers as a potential solution to the on-going ‘productivity puzzle’. By investing an additional £1.2bn in automation technologies over the next decade, the UK manufacturing sector is forecast to create an additional £60.5bn of economic output and safeguard more than 105,800 jobs throughout the wider economy.

“However, to reap these rewards we need to address some of the barriers to investment including the need for more user-friendly and flexible technology, addressing skills barriers within the sector and supporting manufacturers to access the funding and information already available to them for robotics investment.”

Pharmaceutical and food manufacturing sectors most likely to benefit

The pharmaceutical and food manufacturing industries have the most to gain from further investments in automation with the research showing a more than 10% increase in output between 2016-2020 and close to a 25% rise between 2020-2025 for both sectors. This will be driven by the two sectors’ comparatively large existing base in terms of size and take up of automation technology, and by the relative ease of application of automation technology to both sectors.

More than half of British manufacturers already invest in automation

The research found that more than half (58%) of British manufacturers surveyed report that they have already invested in automation and, of these, two-thirds (65%) felt that they are more productive as a result. Furthermore, 76% of British manufacturers report that they believe there are opportunities for further investment in their business with parts manufacturing (24%) assembly (15%) and packaging (12%) identified as areas of the business with the greatest potential for future investment in automation technology.

Access to funding needed to increase automation uptake

The research also shows that British manufacturers are nearly as likely to report investing in automation as their German counterparts (58% vs 66% respectively). This indicates a wide base of existing investment for the British industry to build from if barriers to investment can be addressed.

British manufacturers cited factors such as the availability of both internal and external funding (23% and 15% respectively), competing demands for capital expenditure (26%), limitations with current technology (18%), return on investment (16%), concerns over workforce morale (11%) and relevant skills (10%) as barriers to greater automation investment in the past 12 months.

In addition, to help increase investment further, 28% of respondents also highlighted the need for more flexible equipment, where one piece of equipment can accomplish multiple tasks, greater access to external funding (26%), support with technology implementation (18%), and more education and information on the benefits of automation adoption (17%).

UK200Group member comments on news that Business Growth Service is closing

A member of the UK200Group of independent accountancy and law firms has today commented on news that the government is closing the Business Growth Service. The initiative, which is now being dropped as part of a 17% budget cut at the Department for Business, Innovation & Skills, was set-up for firms seeking advice on expansion. The Service’s website currently displays a statement informing visitors that no more contracts will be started after midnight Monday 30 November.

Duncan Montgomery, tax partner at UK200Group member firm Whittingham Riddell, said:
Growth Accelerator in particular was delivered to and made a big difference to many of our clients. Removing this service abruptly as part of a programme of cuts that do not appear thus far to have balanced our annual books, seems to be counterintuitive. SMEs create jobs, pay taxes and drive the economy upwards. Helping them do that is a positive investment.

2015 Black Friday UK SME spend data

– 40% uplift in retail spending around Black Friday
– UK retailers using Vend processed £910k worth of sales just on Black Friday, up from £650k on an average Fri in November

– 13% increase in sales volumes on Black Friday and a 29% increase in average sales value. The average transaction value on Black Friday was £22.

– 79% increase in the number of discounts applied by retailers, compared to the November average.
– However, post-Christmas discounting is still much higher than Black Friday – our 2014 data shows that on on 29th Dec the number of discounts jumped by 131% compared to Black Friday.

– Fashion & Apparel stores saw the biggest benefit from Black Friday – spending in their stores increased by 92% compared to average, followed by Electronics & Computer stores (66%) and Sports & Outdoor (55%).

– Christmas still likely to outspend Black Friday
– Vend’s 2014 data shows that the weekend following Black Friday (6th & 7th Dec) retail spending increased even further, and continued to rise every weekend leading up to Christmas.
– Spending increases by 27% from Black Friday to its peak on Saturday 20th December.

– Big spending doesn’t always spell great news for retailers, as Black Friday impulse buys can create high levels of returns and refunds.
– Vend’s 2014 data showed that customer refunds from October-December are at their highest point following Black Friday on the 9th Dec (64% higher than average). Refunds then spike again on the 30th Dec to near-identical levels, following Christmas.
Increase in retail spend by major city over Black Friday compared to average Friday in November:

1. Bristol (79%)
2. London (62%)
3. Birmingham (60%)
4. Leeds (48%)
5. Manchester (47%)

Increase in retail spend by vertical for Black Friday compared to average Friday in November:

1. Fashion and Apparel (92%)
2. Electronics and Computers (66%)
3. Sports and Outdoor (55%)
4. Health and Beauty (54%)
5. Home and Lifestyle (47%)

Everyone’s a winner at NACFB’s Gala Dinner & Industry Awards

On 26th November the National Association of Commercial Finance Brokers (NACFB) held its Annual Industry Awards Ceremony and Gala Dinner at the Park Plaza Westminster Bridge in the heart of London. One of the few venues large enough to fit 780 guests into a ballroom, the Park Plaza has become the regular venue for this much-anticipated Gala Dinner. We haven’t found anywhere else that does it better.

On stage we welcomed a genuine Hollywood film actor in the form of stand-up comedian Omid Djalili, famous for appearing in such films as Shaun the Sheep, Pirates of the Caribbean, Gladiator and Notting Hill. Omid has starred in a NBC sitcom with Whoopi Goldberg, and had his own TV show over here too.

Music came this year from the Blondettes, billing themselves as the UK’s hottest vocal trio. Freya, Alice and Clare performed swinging re-imaginations of pop classics, from James Brown to James Bond to Beyonce. Our auction was hosted by the excellent impressionist and comedian Aaron James, and the generous sums bid are in no small part due to his commanding and engaging performance as auctioneer.

As every year, the event was really all about recognising the lenders who have been independently voted the most outstanding in their sector.

Here are the NACFB’s Industry Award winners for 2015:

• Business Bank of the Year: Lloyds Bank
• Specialist Lender of the Year: Funding Circle
• Small Lender of the Year: Liberty Leasing Plc
• Buy to Let Lender of the Year: Shawbrook Bank
• Motor Vehicle Finance Provider of the Year: Close Brothers Asset Finance
• Factor and Invoice Discounter of the Year: Bibby Financial Services Ltd
• Short Term Lender of the Year: Dragonfly Property Finance
• Leasing and Asset Finance Provider of the Year: Aldermore
• Commercial Mortgage Lender of the Year: Barclays Bank
• Outstanding Contribution to the Asset Finance Industry: Graham Wilcox

The NACFB’s chosen charity in 2015 was Cerebral Palsy Sport, the country’s leading national disability sports organisation supporting people with cerebral palsy to reach their sporting potential. Its stated mission is to improve quality of life for people with cerebral palsy and other physical disabilities through sport, physical activity and active recreation. The Association’s members raised an exceptionally generous £17,327 for the charity.

We’re very grateful to Shawbrook Bank for sponsoring the evening.

Adam Tyler, CEO of the NACFB, said:
“This was a night to look back with some pride not just at the past year but at everything that’s happened over the past eighteen months of regulation. It’s been a period of adapting to change and the figures show our members and patrons have thrived – bring on 2016!”

Will sterling benefit from UK data releases?

An update from Charles Purdy, director of Smart Currency Exchange.

Sterling weakened against both the euro and US dollar on Friday as the latest estimate of UK growth showed 0.5% economic growth throughout the previous quarter. Sterling fell close to a seven-month low against the US dollar.

A quiet start to this week sees no major data releases from the UK until tomorrow. Results of the latest bank stress test will be available tomorrow morning, and with Bank of England (BoE) governor Mark Carney speaking later in the day we can expect some sterling movement. Alongside this, we will see the release of Purchasing Managers’ Index (PMI) data from the previous month, with the first of these released on Tuesday for the manufacturing industry. Construction sector data will follow on Wednesday, but investors will be eagerly awaiting data from the services industry, with growth in this sector likely to benefit sterling.

ECB in the spotlight as euro struggles
The euro re-approached its recent seven-month lows against the US dollar on Friday, as expectations for a December rate hike for the US comes into real focus. In terms of data it was a better day for the single currency as German consumer confidence data came out slightly better at 9.3, beating the forecast of 9.2. Consumer confidence for the Eurozone was much stronger than expected, coming out at -5.9, which was a vast improvement from the estimated figure of -7.7.

Monday could be a positive start for the euro as retails growth sales data is expected to increase from 0% up to 0.5%. Employment figures from the euro are out on Tuesday but they are expected to remain at 10.8% – any deviation from this could affect the single currency going into a big month.

The main event for the week, however, is the European Central Bank (ECB) press conference on Thursday. We expect clarification from ECB President Mario Draghi on changes to their monetary policy (following his hints in recent weeks) which could spell movement for the euro.

Busy week for the US economy as Yellen takes centre stage
It was a quiet day for the US dollar on Friday, with no data releases. This week, however, we can expect quite a busy week with key data releases due.

Tuesday will see the release of the ISM Manufacturing Purchasing Managers’ Indices (PMIs), which are expected to show continued growth from the recently underperforming sector. The key non-farm employment change figure is released on Friday, preceded on Wednesday by the ADP employment survey and on Thursday by the November initial claims figures. Investors will be watching Friday with a keen eye, as non-farm Employment change figures, which are expected to show a slight decline on the previous month’s data, are a key driver in higher US interest rates.

The spotlight this week will also shine on speeches from Federal Reserve Chair Janet Yellen on Wednesday, as well as a testimony from her on Thursday. This could provide investors with more information regarding a potential interest rate hike before the year-end – any such information could have a significant impact on dollar markets.

Canadian economy the busiest of the bunch
After a rather boring week with limited economic data, this week’s prospects offer a lot more opportunity for movements in other currency markets. The busiest of the bunch is the Canadian economy, which will release its growth figures on Tuesday – these are expected to remain at last month’s levels of 0.1%. On Friday we will see Canadian employment data as well as the trade balance. The employment change is supposed to be negative for the first time since July.

There will be manufacturing data early tomorrow morning from the Chinese economy. This is expected to remain below 50, a position it has been in since September. Results below 50 express contraction within the manufacturing industry, which has been apparent since Chinese stocks crashed in June.

Expert from Markit, Chris Williamson comments on the UK GDP data from the ONS

Chris said: “The latest official data showed the UK economy continued to grow at a reasonably strong pace in the autumn, with increasingly robust domestic demand from businesses and consumers being offset by weak trade as key export markets remained in the doldrums and the strong pound hit competitiveness.

“The UK economy grew 0.5% in the third quarter, according the latest official GDP estimates from the ONS, confirming the initial estimate.

“Growth slowed from 0.7% in the second quarter as international trade exerted the strongest drag on record, suggesting the UK is being hurt by weakened global demand and the strength of sterling.

“Trade took a huge 1.5% off GDP growth. However, we’d treat the trade data with caution, as the numbers are both volatile and prone to revision. Note that trade had boosted GDP by 1.4% in the second quarter. Eventually, we’d therefore expect third quarter GDP to be revised up to 0.6% as the trade data get revised.

“Another area of doubt is construction, were the official data suggest output fell 2.2% in the three months to September, which contrasts with stronger business survey data, again suggesting there’s a likelihood of the official data being revised higher.

“Industrial production also rose, up 0.2%, though this masked a 0.4% decline in manufacturing output, the latter presumably hit by the decline in exports.

“The main driver of growth was therefore once again the service sector, where output rose 0.7%, accelerating from the 0.6% rise seen in the second quarter. Both business and consumer oriented services grew strongly, pointing to increasingly robust domestic demand.

“Looking ahead, further growth of 0.6% is signalled for the economy in the fourth quarter, according to Markit’s PMI survey data, which would mean the economy grew by a respectable 2.4% in 2015.

“The sustained strong growth suggests that the economy is capable of withstanding higher interest rates, but clearly the Bank of England remains worried by the lack of inflation and the uncertain external environment, meaning there’s little chance of any imminent interest rate hike. However, if the economy continues to show such robust growth in early 2016, there’s a good chance of rates starting to rise in the spring. The caveat is that wages growth and the strength of sterling will of course also remain important keys to the timing and pace of any rate hikes.”

NACFB Gala Dinner Award Winners

Last night at the Park Plaza Westminster 770 guests celebrated the 23rd year of the National Association of Commercial Finance Brokers.

Award winners were – all “of the Year”

Business Bank – Lloyds Bank

Commercial Mortgage Lender – Barclays Bank

Leasing & Asset Finance Provider – Aldermore Bank

Factor and Invoice Discounter – Bibby Financial Services

Motor Vehicle Finance Provider – Close Brothers Motor Finance

Buy to Let Lender – Shawbrook Bank

Specialist Lender – Funding Circle

Most Supportive Lender – Hitachi Capital Business Finance

Most Innovative – Shawbrook Bank

Small Funder – Liberty Leasing

Short Term Lender – Dragonfly Property Finance

The Outstanding Contribution to the Asset Finance Industry Award went to Brian Wilcox

The charity this year was Cerebral Palsy Sport and the gathering raised £15,747.00 aided by a lively auction that saw some fierce, and it must be said, very generous bidding in which NACFB chairman played a leading role, encouraging others to dig deep.