View From The Chamber

Dr Brian Sloan, Chief Economist at Greater Manchester Chamber of Commerce

This week the British Chambers of Commerce released the national Quarterly Economic Survey results indicating that there has been a further deterioration in the UK economic situation and there is likely to be a stagnation in the first quarter of 2012.

The BCC is keen to point out that these results do not necessarily indicate that a recession is a foregone conclusion. The concern with the national picture is that demand measures have weakened, particularly the domestic market, and exports are slowing. With uncertainty over future demand from consumers and the country’s largest export market the Eurozone, business confidence has weakened along with intentions to invest in the coming months.

A clear sign of this lack of business confidence is the increasing numbers of businesses operating at capacity, yet there is a lack of investment intentions to create more capacity. As businesses are holding back with investment they are also holding back on their recruitment plans, so national unemployment is likely to increase beyond the current 2.64 million.

But how does Greater Manchester compare with the national picture. We already know that the area outperformed the regional picture, and indeed Greater Manchester for this quarter is outperforming the national picture also. Demand in the domestic economy is stronger in Greater Manchester for manufacturing, despite the challenges faced in the construction sector, and service sector demand is stronger as a result of the city centre’s financial and professional services.

Export demand for manufacturing is similar to the national picture, although service sector export demand is weaker. Greater Manchester’s job creation has outpaced the national picture, though this is weakening moving forward and looking similar to the national picture. It would seem that business confidence in our area is weakening in the same way as the national results, and leading in turn to an unwillingness to invest. We have seen the impact of the Eurozone crisis over the last two quarters’ results for Greater Manchester, and there is continued uncertainty over how that will pan out, but there is uncertainty also over domestic demand by consumers moving ahead as unemployment continues to increase.

Future growth will only come from investment. The Government’s Autumn Statement announced a package of investment and support for businesses that we warmly welcomed. What we need now is for those words to be put into action and for money to reach businesses and projects to get underway as quickly as possible.

There have been delays with Regional Growth Fund monies reaching the successful bidders as a result of due diligence, delays that cannot be repeated. But we must also look at bringing forward major infrastructure projects that will help create the confidence for businesses to start-up here or encourage foreign investment, to create jobs knowing that they can move their freight and people easily and efficiently. Changes to employment legislation, lengthy and complex planning processes and skills also have an important role in supporting business confidence by creating an environment of certainty that supports, not hinders job creation.

A recession is by no means inevitable, and given the right support our region is better placed than most to meet the challenges ahead.

What's In Store For 2012?

Dr Brian Sloan, Chief Economist at Greater Manchester Chamber of Commerce, gives his predictions for the year ahead.

2012 is likely to be another challenging year for the economy. There will be another period of slow growth, certainly very weak in the first quarter as our Quarterly Economic Survey indicates. As a consequence job creation is also likely to be very much weaker, perhaps slightly negative. Growth in the future is going to rely heavily on exports and business investment. The latter looks unlikely to become significant in the near term as there is too much uncertainty and a lack of demand.

Rebalancing and shifting the economy towards exports cannot be done at the flick of a switch and the dependency on a number of trading partners for existing export market destinations is going to weigh heavily on potential growth prospects.

Interest rates are likely to remain at the historical low probably for the whole of 2012, though speculation about increases is likely to pick up towards the end of the year.

Inflation will fall in the new year as the VAT increase drops out of the measure, the CPI measure falling perhaps to 3.5% or below by March (published in April). As the year progresses inflation should fall further.

Household consumption has been the major contributor to growth since the end of the recession, though the rate of inflation at around 5% and wage increases running at around 2% is eroding real incomes, so that consumption is flat. Uncertainty over employment prospects as unemployment nudges higher is also weighing on demand. Household consumption is unlikely to pick up early in the new year and given the raft of pre-Christmas sales, indicating the challenge for already distressed retailers, we are likely to see some big names fail as margins have been squeezed by discounting.

Unemployment will rise further in the new year at the national level, and the regional performance is also likely to be one of increased unemployment as private sector job creation in the region has weakened considerably of late. The claimant count is almost certain to rise as a result of a shift from certain benefits to job seekers allowance, though there will also be an element of the increase attributable to further public sector losses and private sector losses. The private sector is not capable or willing at this stage to create jobs in the numbers required to offset the likely upward movement in the claimant count.

As a result of the Autumn Statement announcements and Regional Growth Fund successful bids we are now starting to see some investment coming through for businesses, transport and other infrastructure improvements, as well as support for construction projects that have planning permission. There is also the additional Regional Growth Fund money of £1bn. How quick these things will get moving is unclear and they are perhaps a little late in the day to hold off some damaging impacts on the economy in 2012.

Much will hinge on the success of the European Union agreements on the Eurozone EFSF fund, though issues about sovereign debt will be with us for some time to come as those countries such as Greece, Portugal, Spain and Italy attempt to refinance existing debt in the months/years ahead.

The Nightmayor Before Christmas?

Chris Fletcher, Policy Director at Greater Manchester Chamber of Commerce

One of my favourite festive films is Tim Burton’s 1993 stop-motion classic “The Nightmare Before Christmas”. It tells the story of Jack Skellington, the king of Halloween town , discovering Christmas town and deciding that for a change he’d like to be Santa and give Christmas a unique twist. Completely missing the concept, all manner of chaos ensues with, as an example, children getting vampire teddies in their stockings on Christmas morning. Eventually Santa regains control and normal service is resumed with Jack chastened and a lot wiser after his experience. There are a number of morals and learning points that can be gleaned from this story around keeping the status quo, if it isn’t broke don’t fix it and not upsetting tried, tested and established systems.

It’s required viewing in the Fletcher household.

I just wonder if anyone at the Department for Communities and Local Government currently working on elected mayors has ever watched it?

In the same way that chaos ensued from Jack trying to force a different style and process on an established and effective event so it appears, from the sidelines, that the Government is determined to do the same with pushing forward on proposals for directly elected mayors in England’s 11 largest cities.

At present there is a government consultation on what powers an elected mayor should have and in May 2012 there will be a referendum in Manchester on whether or not the city wants an elected mayor.

Irrespective of the powers a mayor would have – and let’s be honest they will not be of an equivalent level of the Mayor of London - one of the real issues with this is at what geographical level the mayor would operate and who would be able to vote.

As things stand the mayor would just be for Manchester not Greater Manchester. This is potentially important as only 9 months ago the Government set up the Greater Manchester Combined Authority which may not mean a great deal to people but it is the only city region body of its kind, with statutory powers, outside London. At the same time the Greater Manchester Local Enterprise Partnership was set up, likewise Transport for Greater Manchester. There’s a theme developing here. So why then would you go and put in the Jack Skellington figure of a Manchester mayor and expect it all still to work in the same way?

When I asked for clarification on this from DCLG a rather baffling response was received that basically said the mayor would just be for Manchester but their influence would extend beyond those boundaries. So, as a resident of another borough in Greater Manchester I would not be able to vote for the mayor but could still be affected by decisions they make. An interesting concept.

There is a huge discussion that still needs to be had outside of the current consultation. There also needs to be a debate on how the business community will benefit from this and how its voice can be represented. It is important that we don’t lose sight of the fact that government is prepared to loosen the grip of centrally controlled powers in Whitehall – look at the recent “City Deals” announcement from Nick Clegg. But if it is going to work in the best way then a wider discussion is needed and we’ll be looking at this in 2012.

The view of the Chamber is that Greater Manchester needs a wider range of strategic powers such as are vested in the Mayor of London so that the economic potential of the region can be achieved. We’ll consult further with our members on what the best vehicle for these powers would be including the existing Combined Authority or a directly elected mayor. However we are convinced that such strategic powers can only be exercised effectively across the City region of Greater Manchester as a whole.

Jack Skellington, Santa and the residents of Halloweentown and Christmastown all lived happily ever after. I just hope that we don’t end up with the vampire teddy.



Friday Guest Blog

Tips For Choosing An International Partner

Ken Primrose, Managing Director of Industrial Tomography Systems

Finding an international partner requires a lot of hard work and diligence, especially when in a niche industry such as the one ITS operates in. Any company should begin by looking at agents/distributors to see if they are suitable, doing thorough research in to the work that they do and who for and finally, implement a rigorous selection process.

It is not necessary – or adviseable – to use a third party in a partnership, who can often distort the communication process and lead to confusion and misleading information.

Finding potential partners can be done through a variety of different means; internet research, conferences, exhibitions, industry associations, sometimes advertisements – depending on the work - and support from groups such as UKTI and the Chamber of Commerce. If using one of these bodies, it is crucial to give a detailed brief about what the company does and is looking for and, regardless of the means in which an organisation finds a potential agent, it is important to manage expectations – how much of the sales process can they undertake and how much support will they need? Look for partners who have the right resources, contacts, customer base and capability and above all, who understand the industry the organisation works in.

Approaching a potential agent can be a time consuming, drawn out process, so it is important to be patient and expect that the process from targeting to negotiation to appointment can take far longer than expected. Do not jump at the first positive interest – it is better to take longer and appoint the right partner than to waste both time and effort on the wrong one.

Choosing a larger distributor is beneficial in that they often have more resources and coverage, however it can be disadvantageous if they are too large to dedicate enough time to your company. It can be better to be a larger contributor to a smaller company rather than a less significant contributor to a smaller one.

Always request – and take up – references before deciding on a partner, but do your own research also. Trade bodies can be an endorsement through membership, but should not be relied upon soley as a reference point.

Finally, remember that partnerships only work if both parties feel that they are getting the results. Make sure any appointed agent knows what the company’s targets and expectations are and that they regularly communicate back with accurate data. Be careful with the intial agreement and any legal issues – sometimes it will inevitably go wrong and a well-drawn up agreement will ensure that there is a legal get out clause should targets not be met and results achieved.

World leader in process tomography, Industrial Tomography Systems (http://www.itoms.com/), started life as an incubator company, bringing technologies developed at UMIST to market. ITS has now commercialised the technology so successfully that it trades in companies as far afield as Brazil and the US and boasts an impressive client list including household names such as GlaxoSmithKline, Unilever and DuPont.

First Aid App Is Free

St John Ambulance has announced its first aid iPhone app is now free to download. The app which gives users advice on how to treat a range of emergencies, as well as minor injuries, has proven to be the difference between life and death.

Launched last year, the ‘St John Ambulance First Aid’ app became an instant success and was the UK’s best selling health and fitness app. It has now been downloaded by nearly 43,000 people – and the charity has learnt that it has already saved a life, when a mother got in touch to say she was able to give first aid to her choking baby, thanks to the app.

As winter approaches, the app gives useful advice on how to deal with effects of the cold, such as hypothermia and frostbite. It also demonstrates how to cope with emergencies such as choking or heart attacks. The charity is urging iPhone users to download the app so they have the first aid information they need to save a life or provide support while waiting for help to arrive, particularly important during winter months when ambulance waiting times may be longer.

With easily accessible step-by-step information, an intuitive interface and voice prompts for several first aid techniques, the free app is something every iPhone, iPod touch or iPad user should have.

Sue Killen, CEO, St John Ambulance, said: "We' like to thank the thousands of people who have already downloaded the app and made it possible for us to now make it free. I hope that even more people will download it now. Up to 150,000 people die in situations where first aid could have given them the chance to live and we are determined to change this. Being armed with the app could help you be the difference between a life lost and a life saved."

The app is now free to download from the Apple App Store and the charity hopes to develop a multiplatform app in 2012. For further information about St John Ambulance’s first aid and health and safety courses in the North West call 0844 770 4800 or visit sja.org.uk/training Chamber of Commerce members are entitled to a 10% discount off all St John Ambulance’s business courses in the North West (terms and conditions apply).

Guest Blog

Investing In Inflationary Times

Stephen Samuels of Samuels Financial

Inflation can cause havoc for your personal finances as it erodes the real value of our money over time. Not surprisingly, research shows that as many as nine out of 10 people are worried about the effects it can have on their money (Source: Post Office Savings, June 2011). Inflation may have dipped slightly in June, but it is significantly above the 2 per cent target set by the Bank of England. It could yet rise above the 5 per cent barrier once the widely anticipated energy price hikes are taken into account later in the year.

If inflation ran at the Bank of England’s intended target of 2 per cent, the sum of £100,000 would be worth £67,297 in real terms 20 years later. At 4 per cent the real value would drop to £45,639, while at 5 per cent the original sum of £100,000 would be worth just £37,689 in 20 years’ time.

In short, savers and investors need to have their wits about them if their money is to keep pace with inflation. But that is easier said than done, particularly given the wide disparity between inflation and interest rates.

Basic rate taxpayers need to earn interest of 5.25 per cent on their savings in order to make a real return on their money once CPI inflation is taken into account. Higher rate taxpayers are in an even worse position, needing returns of 7 per cent to stop the value of their deposits being shrunk by inflation. But with interest rates at rock-bottom levels, accounts paying such high rates are very few and far between.

In inflationary times, when the real value of level income payments is eroded over a few years, it is important to find good and increasing sources of investment income.

This is the big dilemma for many savers today. Not unreasonably, they do not want to lose a penny of their hard-earned cash. But with increasing life expectancy and potential long-term care costs to consider, they will need their money to work harder for longer – and this is likely to mean taking on more risk.



The question is where to start?

In the current inflationary environment the yields from gilts in real terms offer few attractions – a challenge for the government of course, because it continues to have a large funding requirement. Opportunities for attractive income still exist in the corporate bond market, however investors are having to be increasingly selective. Certain investment-grade bonds offer competitive yields and lower risk, while the ‘high quality end’ of the high yield – or non-investment-grade – market continues to present income seekers with some options.

The key for investors is to hold a portfolio of funds which offers the flexibility to exploit the selective income opportunities from across the corporate bond spectrum.

One of the most efficient ways to beat inflation over the longer term is to invest in the stock market and take advantage of the dividends paid by companies. After a couple of leaner years in the teeth of the recession, the earnings of UK companies are looking far more healthy. On the back of those profits the outlook for dividends is more positive. History shows that returns on equities can beat inflation and dividends can play an important part in this. According to the Barclays Capital 2011 Equity Gilt Study, £100 invested in equities at the end of 1899 would be worth just £180 in real terms today without the reinvestment of dividend income; with reinvestment, the same portfolio would have grown to £24,133.

Diversification is also key in balancing risk and returns. For instance, commodities (such as those linked to food inflation) might be able to play a role in a balanced portfolio, so it is worth seeking out funds which invest in so-called ‘alternative assets’. Another income producing asset, commercial property is also beginning to attract attention again. Returns are up 9.1 per cent over the 12 months to the end of June (Source: IPD UK Monthly Property Index Results, June 2011). Again, history suggests that commercial property has a place in a portfolio and its long-term track record is strong, while it offers diversification from equities.

Inflation also brings particular problems for people about to retire because even a low level of inflation will seriously dent pensioners’ fixed incomes over a number of years. Anyone buying an income for life with their pension pot might assume that an annuity linked to inflation via the retail prices index (RPI) is the solution – these pay less income in the early years of retirement than a standard annuity, but eventually catch up and end up paying more later on.

But the decision is far from straightforward. How well RPI-linked annuities perform compared with “level’’ annuities depends on what happens to inflation, and you may have to live a long time after you retire for you to be “in the money”. This is why it is crucial to get advice on the once in a lifetime decision about buying an annuity – once the decision is made, there is no going back.

Inflation and uncertainty go hand in hand, but it is even more marked given the current economic turmoil. It is why investors are going to have to explore all the options to make the most from their savings and investment – and maybe taking a step up the risk ladder.

To receive a complimentary brochure covering Financial Planning, Pensions, Protection and Inheritance Tax Planning, contact Stephen Samuels of Samuels Financial on 0161 773 5777, email info@samuelsfinancial.co.uk or visit www.samuelsfinancial.co.uk

Guest Blog

Howard Hunter, Managing Director of Bakestone

'Lunch is for wimps' was the catchphrase of eighties ambition, but it's definitely breakfast that’s become the meal to miss as people plunge headfirst into another manic day.

As the owner of a bakery, part of my job is to keep aware of trends in how people eat to keep us ahead of the competition. What we’ve noticed is that the seismic shift from sitting down for a cooked breakfast to grabbing a slice of toast on the hoof has now moved to the stage where most professionals skip breakfast altogether and power through, gradually flagging until lunch time.

However, I’m sure you probably don't need telling this, as many of you will recognise exactly what I’m talking about (you know who you are!).

Whilst part of this is symptomatic of the fact that we simply have less time nowadays, I want to fight the cause of the British Breakfast and argue that it will actually make you more successful. Your mum didn’t call it the most important meal of the day for nothing!

It’s long been proved that eating breakfast will give you more energy and reduce hunger throughout the day. Who can forget the horror of the rumbling stomach in that important business meeting?

But there’s a more sinister impact in that having an empty stomach is linked to a dramatic loss in concentration, making those who miss their breakfast munch significantly less on the ball at work. Yes, your work performance could be suffering because of losing out on breakfast!

Not only that, but isn’t it a better way to start the working day sat eating a bowl of porridge, some hot buttered toast or a bacon buttie than legging it out to the train and braving out the hunger pangs till lunch?

So to summarise, breakfast makes business sense! Bring it back into your day and see how much more you achieve. I’ll even send a free loaf to anyone who emails me who pledges to give it a go.

Guest Blog

Investing In Inflationary Times

Francis Monteiro Dip PFS, Partner at St. James’s Place Wealth Management

Inflation can cause havoc for your personal finances as it erodes the real value of our money over time. Not surprisingly, research shows that as many as nine out of 10 people are worried about the effects it can have on their money (Source: Post Office Savings, June 2011). Inflation may have dipped slightly in June, but it is significantly above the 2 per cent target set by the Bank of England. It could yet rise above the 5 per cent barrier once the widely anticipated energy price hikes are taken into account later in the year.

If inflation ran at the Bank of England’s intended target of 2 per cent, the sum of £100,000 would be worth £67,297 in real terms 20 years later. At 4 per cent the real value would drop to £45,639, while at 5 per cent the original sum of £100,000 would be worth just £37,689 in 20 years’ time.

In short, savers and investors need to have their wits about them if their money is to keep pace with inflation. But that is easier said than done, particularly given the wide disparity between inflation and interest rates.

Basic rate taxpayers need to earn interest of 5.25 per cent on their savings in order to make a real return on their money once CPI inflation is taken into account. Higher rate taxpayers are in an even worse position, needing returns of 7 per cent to stop the value of their deposits being shrunk by inflation. But with interest rates at rock-bottom levels, accounts paying such high rates are very few and far between.

In inflationary times, when the real value of level income payments is eroded over a few years, it is important to find good and increasing sources of investment income.

This is the big dilemma for many savers today. Not unreasonably, they do not want to lose a penny of their hard-earned cash. But with increasing life expectancy and potential long-term care costs to consider, they will need their money to work harder for longer – and this is likely to mean taking on more risk.

The question is where to start?

In the current inflationary environment the yields from gilts in real terms offer few attractions – a challenge for the government of course, because it continues to have a large funding requirement. Opportunities for attractive income still exist in the corporate bond market, however investors are having to be increasingly selective. Certain investment-grade bonds offer competitive yields and lower risk, while the ‘high quality end’ of the high yield – or non-investment-grade – market continues to present income seekers with some options.

The key for investors is to hold a portfolio of funds which offers the flexibility to exploit the selective income opportunities from across the corporate bond spectrum.

One of the most efficient ways to beat inflation over the longer term is to invest in the stock market and take advantage of the dividends paid by companies. After a couple of leaner years in the teeth of the recession, the earnings of UK companies are looking far more healthy. On the back of those profits the outlook for dividends is more positive. History shows that returns on equities can beat inflation and dividends can play an important part in this. According to the Barclays Capital 2011 Equity Gilt Study, £100 invested in equities at the end of 1899 would be worth just £180 in real terms today without the reinvestment of dividend income; with reinvestment, the same portfolio would have grown to £24,133.

Diversification is also key in balancing risk and returns. For instance, commodities (such as those linked to food inflation) might be able to play a role in a balanced portfolio, so it is worth seeking out funds which invest in so-called ‘alternative assets’. Another income producing asset, commercial property is also beginning to attract attention again. Returns are up 9.1 per cent over the 12 months to the end of June (Source: IPD UK Monthly Property Index Results, June 2011). Again, history suggests that commercial property has a place in a portfolio and its long-term track record is strong, while it offers diversification from equities.

Inflation also brings particular problems for people about to retire because even a low level of inflation will seriously dent pensioners’ fixed incomes over a number of years. Anyone buying an income for life with their pension pot might assume that an annuity linked to inflation via the retail prices index (RPI) is the solution – these pay less income in the early years of retirement than a standard annuity, but eventually catch up and end up paying more later on.

But the decision is far from straightforward. How well RPI-linked annuities perform compared with “level’’ annuities depends on what happens to inflation, and you may have to live a long time after you retire for you to be “in the money”. This is why it is crucial to get advice on the once in a lifetime decision about buying an annuity – once the decision is made, there is no going back.

Inflation and uncertainty go hand in hand, but it is even more marked given the current economic turmoil. It is why investors are going to have to explore all the options to make the most from their savings and investment – and maybe taking a step up the risk ladder.

To receive a complimentary guide covering Wealth Management, Retirement Planning or Inheritance Tax Planning, produced by St. James’s Place Wealth Management, contact Francis Monteiro, Sunlight House, Quay Street, Manchester M3 3LF 0161-834-9480 or 07710 110436 www.sjpp.co.uk/acorn

Guest Blog

Alex Swift, Regional Director at St John Ambulance in the North West

Provisional figures released by the HSE recently show a worrying increase in the number of fatal accidents in the North West. In 2010/11 there were 23* fatal accidents in the region, a 35% rise on the 2009/10 figures. The region also has the highest average of fatal accidents based on figures for the past five years.

It is worrying to see that the number of workplace deaths has risen in the region. This should be a stark reminder to all employers not to let health and safety slip down their list of priorities. The planned reduction in HSE inspection should not be interpreted as a reason to lose focus on workplace safety. It’s vital that all employers make the necessary efforts to ensure their health and safety provision is up-to-scratch, covering risk management and prevention, as well as having the skills and equipment in place to respond when an accident does occur. If not they face severe consequences.

First aid training for example is far too often seen as a regulatory tick box by employers, rather than a necessary life skill, but it does save lives. We know that up to 150,000 people die in situations where first aid could have given them the chance to live. With some 59% of people wanting first aid training in the workplace, businesses have the perfect opportunity to help reduce this figure before the progress made in previous years is lost and more unnecessary workplace deaths occur.

St John Ambulance has 24 training venues across the North West and can also deliver a range of courses in first aid and health and safety in the workplace. Chamber of Commerce members are entitled to a 10% discount off all St John Ambulance commercial courses in the North West. Call 0844 770 4800 or visit www.sja.org.uk/training

* Source: http://www.hse.gov.uk/statistics/fatalinjuries.htm

Guest Blog

The Bribery Act 2010- Is your Business ready?

Aarti Bedi, an Associate Solicitor in the Employment Team at the Old Trafford based Colemans-ctts LLP.

The Bribery Act 2010 will come into force on 1st July 2011. It has wide ranging and serious implications for all businesses, large or small. This Act creates new offences for offering or receiving a bribe, for bribery of foreign public officials and of a failure to prevent a bribe being paid on an organisation’s behalf.

Businesses will now have to turn their thoughts to how best they can comply with the new legislation to avoid being faced with claims. Here are a few key points to bear in mind:

• There is no need to put bribery prevention procedures in place if there is no risk of bribery on your behalf
• There is no offence of failing to prevent bribery if you can show that your organisation had ‘adequate procedures’ in place to prevent bribery.
• There is no need to extensively amend your handbooks, provided that you have been managing your business with sensible employment contracts and processes.
• Corporate hospitality, if genuine, will not be prohibited as long as the activity is reasonable, proportionate and made in good faith.
• Be aware that facilitation payments (in other words, payments made to officials to facilitate a business transaction) are not permitted and are considered bribes.
Individuals convicted of any of these new offences could face a penalty of up to 10 years' imprisonment. Convicted businesses will be liable to an unlimited fine for failure to prevent bribery.

For more guidance on the Bribery Act see http://www.justice.gov.uk/

If you believe your business might be susceptible to activities involving bribery then we recommend that you undertake a risk assessment. Only then will you be able to identify the “adequate procedures” required to protect your organisation in the face of this new legislation.
For assistance in implementing the provisions in your business or guarding against a claim, please contact Aarti Bedi on 0161 876 2502 or aarti.bedi@colemans-ctts.co.uk