Tech answer to UK growth

The great puzzle about the British economy is how the jobs market and retail sales can be so strong but employer groups such as the British Chambers of Commerce and CBI offer Brexit despond.

The moment of truth may be arriving for the second tier of businesses that find it easier to run their enterprises by opting for the cheaper route of recruiting extra workers, rather than committing to investment in the new technology and equipment which drives productivity and growth.

You wouldn’t know it from hearing Jeremy Corbyn or the Labour frontbench complain about working practices and zero-hours contracts, but the reality is most of the new jobs being created are full-time and PAYe, which is among the reasons why public finances have improved sharply.

There are limits as to whether economic growth can be driven by employment and consumption alone. The latest official data shows spare capacity in the workforce is vanishing. Retail sales perked up 6.7pc in March – ‘smashing all expectations’, as eY chief economist howard Archer described.

Another forecaster, Capital economics, suggested the risk now to the output forecast of 0.3pc for the first quarter is on the upside. Instead of holding back on investment, managements may soon be forced to rethink an approach to expansion that doesn’t simply rely on the supply of labour.

This means investing in the staff they already have with more and better training, especially on how to make more productive use of mobile phones, tablets and laptops.

As we have often been told, most mobile devices now have more computing power, much of it under-used, than a floor of IBM mainframes a couple of decades ago.

It would be terrific if the business groups would change their focus from endless political navel-gazing and attend to productivity. They should advocate that workplaces not only have the best of IT, robotics and artificial intelligence, but also employees capable of adopting it.

Moping around worrying about uncertainty should not be an option.

Jope jolt

The thing about the UK’s best international enterprises such as Unilever is – they get it!

The Anglo-Dutch group recognised long ago that the world has changed and that emerging markets are where the growth is.

It understood there is no substitute for thoroughly testing products before marketing, and it embraced a digital revolution by creating its own online marketing channel when tackling China.

This paper’s backing for keeping the company’s ownership and headquarters in Britain was not based around some misplaced sentimentality about Marmite. We backed the corporate values behind the creation of a vegan Magnum, embrace of Ben & Jerry’s hipster culture and an R&D commitment.

It is a huge mistake for new chief executive Alan Jope to have revived the debate about the legal domicile after the bloody nose delivered by investors last year.

The real driver for Unilever’s growth in the first quarter was selling beauty and personal care products in emerging markets. This is useful in two respects. The health and beauty division largely is run from the UK. And the newer markets in Asia regard Unilever’s core brands, such as Dove and Simple, as aspirational, giving the group pricing power and offering Jope a route to the better margins promised by predecessor Paul Polman.

In the UK, europe and more developed markets, margins often come under pressure. One of the pledges made by Sainsbury’s for its fragile proposed merger with Asda is lower prices, to be policed by an independent adjudicator for five years.

That could only come at the expense of big suppliers such as Unilever, with some capacity to take the hit.

Just as well that the Anglo-Dutch group sees ‘global Britain’ as the real prize.

Seasonal hope

SOMe holiday advice for ace fund managers Neil Woodford and his former colleague, Mark Barnett of Invesco.

having collaborated on the sale of a £42m stake in property developer New River, they should bring the same spirit of harmony to bear on the reverse takeover of Provident Financial by Non-Standard Finance – and look to back away from a toxic transaction as a Good Friday gesture.

happy easter and a joyous Passover.