Banks, Lenders & Investors Business Development & Marketing Cash Flow & Forecasting Finance General

Sector – business in UK’s North and Midlands

UK's North and MidlandsThe UK’s North and Midlands were once the powerhouse for the country’s economy, with its manufacturing and engineering industries driving the Industrial Revolution in the late 19th Century.
Cities such as Leeds, Bradford, Manchester, Sheffield and Birmingham were the industrial heartland of UK when national economies depended heavily on what they could make and sell, from textiles to steel and heavy engineering machinery.
But as industry in UK declined, the UK economy shifted its focus to services and in particular to the professional and financial services with a lot manufacturing being transferred to countries such as India and China, where production costs were much lower. This was also associated with a shift in the UK economic centre of gravity from the Midlands and the North to London leaving much of the country behind.
Vestiges of industry have survived in places like Sunderland, where the Japanese car manufacture Nissan has thrived and recently increased its commitment by investing more than £50m in its plant that builds the Qashqai model.
According to a “State of the North” research by the IPPR (Institute for Public Policy Research) and reported in the Yorkshire Post  in November 2019, “only countries like Romania and South Korea are more divided” than the UK.
It found that “in Kensington and Chelsea and Hammersmith and Fulham, disposable income per person is £48,000 higher than in Blackburn with Darwen, Nottingham and Leicester”.
In December 2019 various reports by the Centre for Cities highlighted the issues. According to the Financial Times it had found that the economic divide between London and the rest of the UK widened last year.
The FT also quoted ONS (Office for National Statistics) figures that showed that “The UK capital recorded a 1.1 per cent annual rise in output per person to £54,700 in 2018, increasing the per capita gap with the poorest region — the North East — where growth was only 0.4 per cent to £23,600 per head”.
The Centre for Cities research analyses business and employment opportunities across the UK, finding that many northern cities are underperforming, hampered by a need for growth and by being at different economic stages in terms of availability of skilled workers and of infrastructure.
But there have been some signs of hope for the UK’s North and Midlands amid the gloom with the Centre for Entrepreneurs think-tank reporting that Birmingham is now the UK’s start-up capital outside London. The British Business Bank has also revealed that entrepreneurs in the north of England received more loans than those in London.
Business Live recently reported that figures from UK Powerhouse have shown that Stoke-on Trent has the fastest employment growth in the UK.
During the recent General Election much was made of pledges to level up the economy with heavy investment promised for the UK’s North and Midlands.
Among the promises made by the Government is a pledge to get on with the proposed HS2 railway to connect northern cities like Birmingham, Manchester and Leeds to London. It argues in support of this plan that “The Midlands already has the highest concentration of businesses outside London, including international firms such as Jaguar Land Rover, MG Motors, Deutsche Bank, JCB and the 150 year old, West Midlands-founded FTSE 250 engineering firm IMI”.
It has also promised “massive investment” in a new institute of technology to be based in Leeds, and to be modelled on MIT in the US (Massachusetts Institute of Technology) and there are suggestions that parts of the Treasury will be relocated to the North of England.
Whether these promises will be delivered remains to be seen, especially given the more immediate and pressing problems of the NHS demands due to the worldwide pandemic of Covid-19 now playing havoc with the global supply chain and countries’ economies.
Perhaps this week’s budget will provide some clues.

Business Development & Marketing Finance General Rescue, Restructuring & Recovery

Keep calm and reassure your EU customers

keep calm and stay positiveWithin hours of the result of the UK’s EU referendum being announced on Friday, June 24, three of our clients trading in Europe had received very different reactions from their European customers.
In one case, our manufacturing client had an order worth £2.4 million cancelled by their European customer.
In a second case, an R&D client who had previously received an indicative offer from a European investment fund received an email pulling the offer.
In the third case, a service company customer took a call from a German customer who was calling to accept a tender and was calling to confirm our client would still do the work if they sent the order with prepayment. The German customer cited the reason as the exchange rate had overnight made a previously uncompetitive tender price very competitive.
It is impossible to say whether these were emotional or rational decisions, especially as in the first example the customer would have actually been better off given the exchange rate.
It is possible there will be a backlash from some European businesses wanting to “teach the UK a lesson”. Equally, the lower value of £Sterling against other currencies will offer opportunities to exporters.
There is no doubt the referendum outcome will result in winners and losers but those who rely on customers in Europe must reach out to them and reassure them.

What immediate steps should businesses trading with Europe take?

While there undoubtedly will be a medium and longer term impact on business, at this early stage business should continue as normal.
It is important to emphasise that business is not in crisis, not that anyone is entirely convinced by the UK Chancellor George Osborne who sought to reassure business in his early-morning speech on Monday. His outrageous predictions made before the referendum have meant that his claims can no longer be credible.
It would be sensible, however, for UK businesses trading in Europe to take steps to reassure their customers that they will be carrying on as normal.
The same goes for the supply chain although if they are buying from Europe costs are likely to rise, certainly in the short term.
More importantly, UK businesses should contact their European customers to confirm their existing order book and reinforce the message that there is now a price advantage for Europeans buying from them.
The fundamental message for our European customers is that UK business is keen to do business with them.
This message needs to be communicated so keep calm and reassure your European customers

Banks, Lenders & Investors Finance General Turnaround

Europe – an uncertain export market for UK?

Several eminent economists have attacked the Eurozone’s post-2008 economic strategy and warned that it could blunder into depression.
During a recent gathering of Nobel prize-winning economists at Lake Constance, Germany, Prof Joe Stiglitz said austerity policies had been a “disastrous failure”, while Prof Peter Diamond said: “Historians are going to tar and feather Europe’s central bankers”.
With Germany’s economy slowing, growth in France stagnating, leading to a mass Government resignation at the weekend, and Italy and Cyprus also contracting this is not good news for the UK’s businesses.
Europe is traditionally the UK’s biggest export market and the current situation is not encouraging despite economic recovery and signs of growth in the UK.
In fact, they are facing a double whammy because £ Sterling is so strong at present making exports to Europe expensive and therefore impacting on both margins and sales. And, if, as has been suggested the European Central Bank embarks on printing more money (quantitative easing) to ease its own dire situation this will further impact on UK sales to Europe by making exported goods and services even more expensive for European customers.
There is a genuine concern that any UK export-led growth, especially to Europe, could be stifled by the high value of £ Sterling.
In this uncertain market businesses, as we have said before, will need to broaden their horizons and look for export opportunities elsewhere.
Has anyone any suggestions for a promising potential export market and also which UK sectors might benefit?