22 international trade
One year on – are we more competitive?
It is a year since the Lib-Con coalition struggled to power. So is the UK now a better, more attractive place to do business than it was under Labour? asks Richard Willsher
The answer inevitably is inconclusive at this stage in the political cycle. Moreover it all depends where you’re from and what sort of business you’re in.
Nonetheless in its latest, 2010-2011 “Global Competitiveness Report“ the Switzerland based World Economic Forum says that Britain is one notch higher than it was the previous year. The independent think tank ranks the UK 12th out of 139 countries.
It uses 12
criteria including among others, a country’s institutions, its infrastructure, macroeconomic environment, health and primary education, higher education and training and efficiency in its market for goods and services. But this report was released before the March Budget.
If you happen to be in the North Sea oil exploration business, suddenly the UK doesn’t seem such an attractive place to do business. “It is not surprising that a number of companies are reconsidering plans for investment in the North Sea,“ commented
John Cridland, director-general of the Confederation of British Industry. “The £2 billion windfall tax is creating uncertainty for a sector which creates jobs and wealth for the economy, and already pays a significant amount of tax.“
Alan McCrae, partner, head of UK energy tax at consultants PwC, added: “Stability, transparency and predictability are fundamentals of government tax policy for business, so why the oil industry has been treated differently is a question left hanging from the Budget.“ Another hanging question might well be, who’s next?
Meanwhile members of the Federation of Small Businesses were underwhelmed. FSB national chairman John Walker, commenting on its post-Budget poll, said: “The Budget was pro-business and we are pleased that the Government has listened to some of our concerns and has extended small business rate relief and scrapped the planned 1p rise in
New business alliance set to boost international trade
A new business alliance has been established in the Solent to strengthen trade links internationally.
Business leaders gathered last month as The Solent International Business Alliance had its inaugural meeting at Grant Thornton’s offices in Southampton.
The group, led by Grant Thornton and Business Southampton, will work together to strengthen networks and increase opportunities for collaborative and cross- border relationships. Members will meet regularly to discuss how business in the south can work together to share knowledge of the global markets and business opportunities, while creating an effective platform to promote the south’s regional strengths in the international marketplace.
The first meeting focused on the Solent’s links with China and featured a talk from Ralph Rogers, China business adviser with the China- Britain Business Council (CBBC).
Norman Armstrong, partner at Grant Thornton and member of the alliance, said: “There are plenty of opportunities for businesses in the Solent to move onto the international
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platform and what’s clear is that companies geared towards global demands and exporting goods and services to international markets are enjoying success.
“However, whilst currency deflation has tipped the balance in the UK’s favour, competition for trade and investment in global markets is intense. That is why groups such as these are vital in helping businesses work collaboratively to penetrate international markets.
“The enthusiasm for our initial focus on China, with the support of the CBBC, shows the significant appetite that exists in the Solent region. I am therefore very positive about the work of the group going forward and what it will achieve.“
Sally Lynksey, chief executive of Business Southampton, added: “The Solent International Business Alliance will play a key role in connecting international business opportunities with local businesses by developing contacts, supply chains and clusters. We plan to focus on the emerging and growing markets that have most relevance to the key sectors in the Solent region.“
fuel duty and the escalator. But, as the results from our poll show, the Budget has not hurt small businesses, but it won’t help them to grow either.“
GDP is still growing. The Economist Intelligence Unit projects 1.6% for this year. Inflation however is beyond the control of the Bank of England because it is being driven by hikes in the prices of imported energy, commodities, food and other inputs. While interest rate rises are being priced in by the markets, the latest CPI inflation figure released by the Office of National Statistics for the year to the end of February was 4.4% up from 4% the previous month. RPI inflation was even worse at 5.5% (5.1% in January).
Some good news is that exports should be favoured by sterling’s exchange rates. However the rate versus the euro is virtually identical versus a year ago (there was a dip in between) and against the dollar the rate has increased unhelpfully from 1.55 to 1.64, though it does make oil a little more affordable.
Overall, with the addition of uncertainty over the impact of corporate and personal taxes, unemployment and the quality of public services delivery in the wake of the cuts, the outlook for the UK’s international competitiveness is far from clear. Chancellor Osborne may show a strong grip on the Government’s purse strings to the markets but that is not necessarily what is best for business. The jury is still out.
Opportunities abound in Indian media
Business leaders in Southampton were given an insight into the media and entertainment explosion India is undergoing at a masterclass held at a regional newspaper.
Parminder Vir of PVL Media Consultants, grew up in Southampton and developed her love of film watching Bollywood movies in the city. She said there were opportunities to explore in the Indian market if businesses were quick: “It’s important to change your perception of India – it is on the move. India is leap-frogging technology. While we are talking about it, India will already have done it. We in Britain are now playing catch-up but it’s not too late because we have many of the skills that India needs.“
The Southampton India Business Network aims to promote the Indian business community within Southampton and foster links and opportunities between the city region and India.
Business Southampton City Champions were also given advice about promoting their own businesses closer to home by developing relationships with the media. Khalid Aziz of the Aziz Corporation said many businesses missed the opportunity to tell their story because they feared the media.
THE BUSINESS MAGAZINE – SOLENT & SOUTH CENTRAL – MAY 2011
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