Big switch to small exports
BRITAIN could not have hoped for better news on the economy on the first trading day since leaving the European Union.
First came the fascinating report that Nissan has drawn up contingency plans to pull out of manufacturing across Europe in the event of a hard Brexit, preferring to ramp up UK production instead.
The Japanese car maker is said to be considering switching to selling more cars in the UK than in Europe if a trade deal leads to tariffs. If that were so, Nissan plans to keep the Sunderland factory going but shut production in Spain and France. Internal reports suggest that Nissan reckons its share of the UK market could be boosted from 4pc to a fifth of all cars sold here.
Nissan denies the report, claiming neither its UK nor its European businesses are sustainable in the event of wTO rules.
Yet there is rarely this much smoke without fire.
The more interesting point is that Nissan is no longer threatening to leave the UK should Boris Johnson and the EU fail to agree on terms.
what this also indicates is that Nissan prefers to stay here rather than switch all production to the continent, mainly because it values its hard-working and loyal Sunderland workforce so highly.
This brings us to the second bit of bright news. The UK’s manufacturing sector had its best performance in nine months in January, with new orders growing at their fastest rate since April last year despite a downturn in exports to the continent.
The IHS Markit/Cips manufacturing purchasing managers index rose to 50 in January as orders flowed, and business confidence bounced back after December’s decisive election.
Britain’s manufacturing industry has emerged from its longest decline since the financial crisis.
This is hugely important as manufacturing makes up 10pc of the economy and has the potential to grow further still.
But it is a sector which needs urgent repair work. Make UK, the manufacturing trade association, warns we have a shortage of 59,000 engineering graduates and technicians each year, a staggering statistic which is holding back growth and which the industry is trying desperately to address. Reforming the apprenticeship levy scheme should be a priority.
Yet there’s a third reason for optimism. Marcus Gibson of the Gibson Index says official figures from the Office for National Statistics are missing out on a boom in exports by SMEs to big growth markets: the US, the Middle East and south Asia.
Gibson, who monitors 70,000 UK small companies, calls this historic shift the ‘Big Switch’. If all small- company export successes are included – such as the 200,000 tiny companies which sell via Amazon and eBay – he claims the real figure for exports growth since the Brexit referendum is 29pc rather than the official 22pc.
More pertinently, Gibson’s tracker shows this extraordinary revival is coming from small companies based in the regions – from wales to the North of England – and they are exporting all over the world.
Nor are they just selling a few lamb cutlets. Leading the charge are those specialising in chemicals, automotive and food and drink, and they export to countries as diverse as Nigeria to Oman. Macedonia now buys nearly as much from the UK as Austria. As
Christopher Columbus said: ‘You can never cross the ocean until you have the courage to lose sight of the shore.’
More Brexit boost
JUST as Brexit unleashed a competition among experts fighting over each other to come up with the worst scenarios for Project Fear, so leaving the EU is prompting competition for the best ways to boost the economy.
The latest experts to wave the Project Hope flag are Alvarez & Marsal, the professional services firm, and Capital Economics, which claim GDP could be stimulated 7pc with four tax changes.
This could be achieved by increasing R&D incentives, the creation of ten free ports and a regional corporate tax system with lower tax rates as well as energy tax changes to reduce energy consumption.
Together, these changes would add up to a £150bn boom to the economy, or £5,500 per household. More submissions, please.
All aboard
DOES Richard Meddings, the TSB chairman, not have enough to do sorting out his own troubled bank? You would think so, and so do customers. Meddings clearly does not agree as he is off to join another scandal-hit bank, Credit Suisse, as a non-executive director. He should think again.