Making sure the green shoots don’t wither away

The UK may be in recovery, writes Scott Barnes, but how can we keep it that way?

Recent third quarter GDP figures for the UK showed a growth of 1.0 per cent, however when these figures were announced, many commentators were keen to point out that discounting this summer’s Olympic Games and Diamond Jubilee spending, the economy has remained stagnant year on year. Although this is a continuation of the current pessimism around the UK economy, the question is whether when you take a closer look at the situation, this is justified. 

Some recent research undertaken by us in conjunction with the Centre for Economics and Business Research (CEBR) found that mid-sized businesses have actually, for the most part, been growing well during the past few years of economic stagnation. After taking a closer look at this growth, it found that mid-sized businesses have been able to boost their productivity, with turnover per employee 18 per cent higher than the UK average, and as a result increase their turnover by £25.7bn over the past year. 

In addition, the third quarter of 2012 company liquidations were down 2.8 per cent from the previous quarter, and 6.6 per cent less than the same quarter in 2011. One of the major factors behind this is that the current low interest rates mean that struggling businesses are better able to service their loans and pay off the interest. As a result, banks are less concerned about calling the loan in. Those businesses that can’t afford to tackle the debt itself are given a bit more breathing space, allowing them to concentrate on growing revenue, rather than struggling to meet loan payments. 

The latest quarterly Business Confidence Monitor from the Institute of Chartered Accountants of England and Wales and Grant Thornton shows that business confidence is actually higher in regions outside of London and the South East. There have been some encouraging initiatives recently from the Government and it will be interesting to see how this glimmer of regional confidence is affected by the recent review by Lord Heseltine and the Coalition Government’s "City Deals" plan. Together, these schemes have called for more government funds to be diverted to regional governments and greater powers for mayors to support this entrepreneurialism and dynamism across the UK.

The pervading economic climate continues to be a proving ground for companies, with those that are still in business emerging lean, organised and efficient. Businesses are taking a fundamental look at how their business is run in order to weather the worst of the economic storm. Clear effective governance, robust planning and attention to financial levers mean they are now equipped to deal with this kind of environment. 

Before businesses start to invest again, economic confidence needs to come from somewhere, and the government must shout about how well we’re doing, and keep providing support for British businesses. If just a fraction of the estimated £720bn of cash reserves in British businesses was invested back into the economy, business investment would return to pre-crisis levels. While the "new normal" means we have to adjust our growth expectations, confidence is needed to ensure the recent economic growth doesn't just prove to be an anomaly and continues.

Green shoots. Photograph: Getty Images

Scott Barnes is the CEO of Grant Thornton UK.

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6 times government ministers have contradicted each other over Brexit

Getting your line straight is slightly more complex than a moon landing. 

“No deal is better than a bad deal,” Theresa May told Jeremy Paxman during the 2017 general election campaign. Almost exactly two months on, her Chancellor, Philip Hammond, has declared the UK will seek a transitional deal that could last three years.

Hammond’s comments come a day after government ministers contradicted themselves over when free movement could end. “Strong and stable”, the Tory campaign slogan, has gone the way of Labour’s Ed Stone. 

Here’s a selection of times government ministers have contradicted each other over Brexit.

1. Free movement

Brandon Lewis vs Amber Rudd and Michael Gove

The immigration minister Brandon Lewis declared on 27 July that a new immigration system would be in place from the spring of 2019.

But his departmental boss, the home secretary Amber Rudd, said the same day that there would be an “implementation period” while the flow of EU workers continued and there would be no cliff edge.

Meanwhile, environment secretary Michael Gove and non-expert Brexiteer said days earlier that there was likely to be a transitional period where free movement continued for two years.

2. Chlorinated chicken

Michael Gove vs Liam Fox

One question emerging from discussion of a potential UK-US trade deal was whether chlorine-washed chicken would be allowed into British supermarkets. The international trade secretary Liam Fox said such chicken was “perfectly safe”.

He may not have been round to Michael Gove’s recently for dinner, then. The environment secretary said he opposed the import of chlorine-washed chicken and that “we are not going to dilute our high food-safety standards” in pursuit of “any trade deal”. 

3. Moon landings

David Davis vs Liam Fox

In June, Brexit secretary David Davis suggested the negotiations to leave the EU were more complicated than landing on the moon.

His fellow Brexiteer Liam Fox, on the other hand, said in July that a future UK-EU trade deal should be “the easiest in human history”. Then again, maybe he just has a different definition of easy.

4. Single market and customs union

David Davis vs Philip Hammond

Perhaps one reason the Brexit secretary is finding it so tricky is that on 27 June he told a conference he plans to leave the single market and customs union by March 2019

But the Chancellor, aka the Mopper Up of Economic Mess, stressed Britain was heading down a “smooth and orderly path”. 

5. EU army

Michael Fallon vs Boris Johnson

In 2016, fresh from a Leave campaign which warned of the dangers of an EU army, foreign secretary Boris Johnson voiced his support for… an EU army.

Defence secretary Michael Fallon, though, had previously said the UK would continue to resist any rival to Nato. 

6. The migration cap

Theresa May vs David Davis and Philip Hammond

As home secretary, Theresa May defended the net migration cap, an idea the Tories thought up while in opposition, even though in practice it was widely criticised and never met. Even though, according to the George Osborne-edited Evening Standard, none of her colleagues privately back the target, it has stayed under her premiership. 

Some ministers have publicly questioned it as well. As early as March, Davis said immigration might go up after the UK leaves the EU.  In June, Hammond said the system for businesses recruiting foreign workers would not be more “onerous” than it is at present. 

(You can see all the ministers in the Brexit government that have realised reducing immigration might be a problem for them here)

 

Julia Rampen is the digital news editor of the New Statesman (previously editor of The Staggers, The New Statesman's online rolling politics blog). She has also been deputy editor at Mirror Money Online and has worked as a financial journalist for several trade magazines.