Business barometer points to brighter economic weather ahead

THE sun is out – or at least the clouds are thinning. March, which starts on Monday, is traditionally the first month of Spring, which is always something to look forward to. And with 18 million people vaccinated – and thousands more getting the jab every day – there is, at last, room for a more confident view of the future.

So the Lloyds Bank Business Barometer’s modest two-point rise during February, which still leaves the overall figure in negative territory, might seem a little disappointing. But David Beaumont, the bank’s regional director of commercial banking, is right to point out that the crisis continues to be painfully felt by many businesses across the South West – especially those which are connected, directly or indirectly, to hospitality and tourism.

Mr Beaumont tells today’s Western Morning News: “It’s encouraging to see confidence creeping upwards, likely buoyed by the prospect of restrictions easing in the months ahead – a prospect confirmed by the Prime Minister in his announcement earlier this week.”

The details of that road map came just five days ago. The business barometer takes its soundings across the whole month. So it may take a while for even the prospect of easing restrictions to start to be felt, especially when the pace of change is set to be extremely slow and careful.

There are already calls from within our region – one from Exeter Labour MP Ben Bradshaw – for the process to be speeded up. Mr Bradshaw is right to point out that Devon’s coronavirus rates are among the lowest in the country.

But his Conservative colleague in North Devon, Selaine Saxby, who also points to the great progress made in getting Devon’s Covid rates down, is concerned that unlocking hospitality businesses at different rates would make managing travel and tourism challenging.

In any event, the PM does not seem ready to change direction with his road map, insisting yesterday, on a visit to a school in Lancashire, that there was little “wiggle room” in his plans to ease the lockdown.

He told reporters: “I think it’s very important to have a timetable that is sensible, that is cautious, but one that is also irreversible. And that’s the virtue of the timetable we have set out.”

There is reason for such a careful approach. But the clamour will grow as case numbers continue to fall and early Spring weather makes hospitality business owners anxious to begin to claw back lost business on what will be, for many, a second Easter holiday missed thanks to lockdown. Rising business confidence is, however, a sign that even a long road out of the crisis will begin to have an impact as companies start to advertise again, beef up their staff numbers and prepare for what should be a great summer ahead.

The long, drawn-out impact of Covid is going to last for years. Next week’s Budget will give us a taste of the economic payback we will all have to make.

But the tide is turning, the rebuilding can begin, and businesses that have been in deep freeze for months and months will start to feel the thaw.

WHEN I heard recently that a lady sending a parcel to a family in Sweden found it took seven weeks and incurred import taxes, I realised it is now more difficult to send parcels to the EU than it is for me to send them to my son in Hong Kong. Why is this? The easy movement of goods and people between countries is not the natural order of things.

The natural order across the world is for complicated and bureaucratic obstacles. These tend not to impede us much because most countries have made agreements with each other to ease the flow of goods and travellers. Such agreements typically have many limitations but in the 1980s the sovereign states of Europe developed a very comprehensive agreement, promoted and largely designed by the UK, and known as the single market. This made movement of all types simpler within Europe than anywhere else in the world.

After the 2016 referendum, the UK could have left the EU with a new agreement, retaining all those aspects of the single market that were advantageous to us. Instead the government went for a complete divorce, dumping the existing agreements and doing little work on replacing them until their rushed deal in December 2020.

The agreement we ended up with is so limited that there are now more bureaucratic barriers to trade with the EU than there are to trade with most other countries. So much was discarded in their haste to ‘get Brexit done’ that in many areas the new arrangements are worse than those we had before joining in 1973.

As a result, the UK will be negotiating with the EU for years ahead to deal with all the details that the government didn’t bother with last December. The objective of these talks will be to simplify trading and transport arrangements with our closest neighbours. This work needs to start soon.

Roger Chapman Bath