UK inflation fell to 1.2% in September from 1.5% the month before according to the Office for National Statistics. The Consumer Prices Index is the lowest since September 2009, when it was 1.1%. Lower energy and food prices helped to cut the rate, while the ONS also reports cheaper transport costs as a contributing factor. NECC members have also reported, during our latest quarterly economy survey, that energy costs are a diminishing concern although it remains to be seen if this will remain the case looking ahead.
The Retail Prices Index measure of inflation also fell, to 2.3% in September from 2.4% in August. The value of sterling has also fallen meaning extra pressure will be placed on exporter margins. Taken together with a slowdown in the Euro area this will need to be monitored closely as we seek to increase export levels across the UK.
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The latest UK trade figures for August have been released:
Goods and Services
• The UK deficit of trade in goods and services for August 2014 was £1.9 billion, compared with £3.1 billion the previous month.
• Between July and August 2014 the deficit on trade in goods was £9.1 billion, narrowing by £1.3 billion from July.
• Over the same period exports of goods decreased by £0.7 billion to £23.2 billion, the lowest since September 2010.
• Imports of goods decreased by £2.0 billion to £32.3 billion.
• The UK’s estimated surplus on trade in services was £7.2 billion.
It is encouraging to see that the deficit of trade in goods and services have decreased throughout July, with the deficit of trade in goods narrowing for the first time in five months. However, it is concerning that export of goods decreased through the month with the deficit only narrowing due to the fall in imports. When analysing international trade data it is imperative to reflect over a wider three month period as often the statistics month of month don’t offer a good overall picture. Looking at the three months to August 2014, the trade in goods deficit widened by £2.7 billion to £29.2 billion. The widening reflects a £2.2 billion fall in global exports and a £0.5 billion rise in imports.
The fall in global exports is alarming and the chancellor must take action now to address this issue. In the 2014 Autumn statement NECC has called for government to issue an APD holiday to regional airports to help exporters explore new markets. In addition to this NECC has highlighted the need for UKTI’s budget to be increased with enhanced flexibility in spending at a regional level to ensure specific priorities are addressed.
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NECC this week attended the Liberal Democrat conference. We co-hosted a reception focusing on the North East economy with NECC Partner Northumbrian Water and the Association of North East Councils, presenting policy changes needed in a range of areas to support our region’s success. Berwick MP Sir Alan Beith and Lord John Shipley both spoke on the need for strong regional decision making in the wake of the Scottish referendum. Further details can be seen here.
During our visit there we also discussed transport priorities with Transport Minister Baroness Kramer; skills and inward investment with a special adviser to Business Secretary Vince Cable; and took part in a series of meetings with MPs, ministers and advisers covering energy, skills, housing and aviation.
In the main conference, Deputy Prime Minister Nick Clegg gave a speech in which he made a strong commitment to further devolution of powers within England. Overall, the party tried to stress differences with their coalition partners the Conservatives, including over welfare policy, human rights and Europe.
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The MPC has voted today to hold interest rates at 0.5% and the quantitative easing programme unchanged at £375bn.
Several business surveys, including NECC’s Quarterly Economic Survey, have showed a dip in scores across sectors for activity both in the UK and in export markets demonstrating that growth is not guaranteed – even if most businesses expect to continue growing as they plan ahead.
The MPC decision matches that of the North East Shadow MPC run in conjunction with NECC, Recognition Marketing and PR, Watson Clark Whitehill and the Northern Echo.
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The North East Culture Partnership is asking businesses to complete a survey on the links between culture and business in the region. The Partnership has been established to enable the North East’s local authorities, arts and culture organisations, businesses and education to work together to support culture, which has helped transform the physical image of the North East and support a healthier economy.
The survey will help identify how businesses already engage with culture, and views on how this could be expanded. It can be completed here. The deadline is 20 October and respondents will be entered into a prize draw to win four tickets for a performance of their choice at The Theatre Royal in Newcastle.