THE UK ECONOMY - WILL THE BENEFITS OF GROWTH BE FELT BY EVERYONE?

Just over six months ago, the media was full of talk of triple dip recessions as many commentators who should have known better went out of their way to talk down the UK economy.

But not only did the economy grow in the first three months of 2013 but a revised analysis showed that it hadn’t even entered a double dip recession in the previous year.

Even then, there were those who were ready to rubbish the way that businesses were working hard to create jobs following the worst recession in living memory.

Yet, the critics have been confounded time and time again as the economy continues to show a remarkable recovery. The latest official figures showed that it had grown by 0.8 per cent between July and September and this follows earlier growth of 0.7 per cent between April and June.

Not surprisingly, the Chancellor of the Exchequer has been reluctant to say that we are well on the road to recovery, stating that there is much that remains to be done to rebalance the economy.

However, it is clear that there is a growing feeling amongst the business community that we have weathered the worst and are on the way back to recovery.

The ICAEW – the body that represents English and Welsh accountants – has predicted that there will be further economic growth of 1.3 per cent in the final quarter of 2013 and that the UK will be come the fastest growing western economy, outpacing even Germany and the USA. More relevantly, it says that business confidence is at its highest for the ten years it has been running its survey.

And last week, the Markit/CIPS PMI for September showed expansion across all sectors of the economy. In the services sector, which accounts for more than three quarters of the UK economy, activity and employment rose at the fastest rate in more than sixteen years.

Similarly, manufacturing experienced the fastest growth in export orders in more than two years and even the construction industry, which has often lagged manufacturing and services, is growing again at the fastest rate in six years.

In previous years, this news would normally have had UK Government ministers dancing in the corridors of Westminster.

Yet this good news has been muted by two concerns.

The first is the Bank of England’s position over interest rates that have remained at 0.5 per cent since March 2009. Some analysts believe that if the economy is perceived to be growing too quickly, the Bank of England could raise interest rates too soon and that could dampen down any recovery when businesses are looking to invest. However, there is also the danger that the economy could overheat if interest rates are not raised soon enough if, for example, there is danger of house prices increasing too quickly.

The second is the concern that many are not yet feeling the recovery in their pockets.

During the last few weeks, we have seen the power companies SSE, British Gas and nPower increase their prices by between 8 and 10 per cent. Given this, it is not surprising that a survey by the UK Government found that 84 per cent of people are concerned about steep rises in energy prices in the future with that almost half the population worried about paying their bills.

The consumer group Which also found that rising food prices are a source of stress to four in ten shoppers while 29 per cent said they were struggling to feed themselves or their family.

Yet, one of the flagship policies of the coalition government at Westminster has been to ensure that hundreds of thousands of low paid workers are no longer paying taxes due to the upgrading of personal allowances since 2010.

However, with wages across many sectors of the UK economy remaining broadly flat since the recession of 2008, the effect on take home pay has been minimal especially as inflation continues to erode the paypackets of ordinary workers up and down the country.

In fact, this recession was very different to that normally experienced in the world of work. Whilst some economists were predicting unemployment to hit 5 million under this Government, it peaked at roughly half of that number mainly because businesses, especially small firms, were reluctant to make their staff redundant.

Indeed, many workers have been kept on when, in previous economic downturns, they would have lost their jobs.

Of course, the consequence of keeping people employed at a time of reduced output is that there have been few pay rises in the last few years whilst prices for essential household items have increased considerably. As a result, many are not yet feeling that the recent economic growth is benefiting their family.

Therefore, it would seem that the next general election will not be fought on whether the economy has recovered as it is almost certain that the UK will be one of the fastest growing economies in Europe by 2015. Instead, the next government of this country will be represented by those who can best persuade ordinary workers up and down the country that they have the policies to ensure that everyone will be sharing the rewards of that economic recovery.

IS THE UK ECONOMY FINALLY ON THE ROAD TO RECOVERY?

Earlier this week, officials from the International Monetary Fund (IMF) arrived in London to undertake their annual review of the UK economy.

And there will be renewed optimism from the UK Government about the state of the economy, following the better than expected GDP growth figures for the first quarter of 2013, which confounded most economic commentators, many of whom had predicted no growth or even a slide into an unprecedented triple recession.

The question, of course, is whether this growth can continue after what can only be kindly described as a flat period for the nation? Certainly, recent data seems to suggest that the increase in GDP may not be a one-off and that we can look forward to a period of sustained growth in the immediate future.

According to the National Institute for Economic and Social Research, the UK economy grew by 0.8 per cent in the three months to the end of April. This follows a report from the accountancy body ICAEW that suggested business confidence was improving amongst firms and the second quarter of this year would see a growth in the economy of 0.6 per cent.

Of course, the dilemma for the UK Government is that it ideally needs all cylinders within its economic engine to be firing simultaneously to push forward growth.

For example, the services sector grew at twice the rate of the UK economy during the first three months of the year and seems set to expand further during the rest of the year. Yet depressingly for those wanting further growth, the other two important sectors, manufacturing and construction, both showed a decline during that period.

However, the latest data on output from the Office for National Statistics shows that factory output actually grew by 1.1 per cent in March following a further increase of 0.7 per cent in February, the first time since 2011 that manufacturing had grown.

And this recovery seems to be one that may finally be sustainable - a survey from Zurich Insurance showed that more than three quarters of Britain’s manufacturers are more optimistic about their industry than they were a year ago.

The disappointment remains the construction sector, which has declined by 2.5 per cent in quarter 1 of 2013. Given this, increased government incentives for infrastructure development and new housing cannot come quickly enough for the industry. However, there seems to be some glimmer of hope that it may be turning the corner and the Construction Purchasing Managers' Index rose from 47.2 in March to 49.4 in April. Whilst this indicator is still below the 50 level that indicates growth, it is better than most analysts expected.

So there are some mixed messages across the three main sectors but is there any good news from other indicators seems to suggest that the UK recovery is back on track?

Advertising spending, which is normally seen as a leading indicator of economic vitality, rose to £17.2 Billion in 2012, the highest level since 2007. More importantly, it is set to grow by a further 7.7 per cent over the next two years not only through online advertising but also through traditional media such as TV and national newspapers.

Another positive indicator was a forecast that house sales are predicted to grow by 7.5 per cent this year, with a million transactions to be completed, the highest level in six years. Confidence is also returning to the buy-to-let market, with 33,500 mortgages worth £4.2bn completed in the first three months of 2013, £500m higher than in the same period of 2012.

But perhaps the most important indicator for the economy is that of consumer confidence, which still remains fragile within the UK despite these more positive economic figures.

Indeed, a recent survey showed that the percentage of those with no spare cash once they have covered essential living costs has leapt from 22 per cent to 30 per cent, reaching its highest level since the second quarter of 2011. Another survey from Deloitte showed that even those with income are cautious about spending on holidays, short breaks and going out. For example, trends for booking holidays in the first quarter of this year showed that whilst 13 per cent spent more than in the previous quarter, 21 per cent of consumers actually spent less.

Yet, this seems to be compounded by data on the most expensive purchase that many people will make after their house. According to the latest figures, car sales in the UK are nine per cent higher in first four months of 2013, with sales to private individuals up by a third compared with April last year.

Therefore, there is some good news out there after months of doom and gloom over the UK economy and it will be interesting to see what the bean counters from the IMF make of the nation’s future prospects after their visit.

Certainly, one swallow does not make a summer and until we see further growth in the next few quarters, then the jury is out on whether we are finally beginning to emerge from the recent recession. We can only hope that the recent increase in GDP will finally bring back confidence over the next few months to both consumers and businesses.

That has been the magic sauce that has been largely missing during the last five years, and if this optimism does grow, then expect the UK economy to follow suit during 2013.

MARGARET THATCHER AND THE ENTERPRISE ECONOMY

As the pages of the Western Mail and other newspapers demonstrated last week, historians and politicians will continue to discuss the legacy of Margaret Hilda Thatcher for many years to come.

The national unity brought about by the Falklands victory or the divisiveness of the miners’ strike?

The perceived unfairness of the poll tax or giving millions of people the opportunity to get on the housing ladder by buying their own council homes?

Helping to bring about the end of communism or obstructing greater co-operation in Europe?

Many will focus on these issues when considering Lady Thatcher's political impact in eleven years as Prime Minister.

But to me, any examination of her place in history should be primarily about how she changed the economic landscape of the UK from being the “sick man of Europe” dominated by industrial unrest and declining industries to an enterprising nation that became the envy of many other developed nations.

And given the circumstances in which she found the country in 1979, it wasn't easy to change the direction of an economy that had become a laughing stock around the world.

But change it is what she did.

And I believe her biggest contribution to the UK economy during her period in office was to kick-start an entrepreneurial revolution that broke the power of the establishment and, as Lord Sugar noted earlier this week, “allowed chirpy chappies to succeed and not just the elite”.

As the daughter of a small business owner, it is clear from her memoirs that her early years of helping out in her father’s grocery store in Grantham had a major influence on her politics and her philosophy.

Self-help, hard work, economic independence and close management of finances, the by-word of many a small family business, were the bedrock on which her years in office were based.

And as someone whose family were not dependent on the state or a large employer, many of her policies were about ensuring that the individual businessman or businesswoman flourished and was allowed to keep more of the money they had worked long hours to earn.

The key to this was probably the reduction of highest rate of income tax from 83 per cent in 1979 to 40 per cent in 1988, a policy that is seen by most supporters as being a major driving force towards greater prosperity within the UK economy.

Yet, in addition to this ‘free market’ approach that many believe epitomised her economic policies, it is easy to forget that her government of 1979-83 was the first to develop any substantial policies to develop a new enterprise culture within the UK, introducing over 100 interventions in its first four years of office to support small firms.

For example, she started the Enterprise Allowance Scheme back in 1982 that gave a guaranteed income of £40 per week to unemployed people who set up their own business. It was the essence of simplicity and shared responsibility, with anyone wishing to claim money under the scheme being required to produce a basic business plan and find the first £1000 out of his or her own funds. As a result of this new programme, 325,000 people were supported to set up a new business.

The Thatcher Governments also set up a range of other enterprise friendly interventions, including the Business Expansion Scheme, which offered tax relief to individuals investing in smaller companies and essentially birthed a UK informal investment and venture capital industry that had not previously existed.

Mindful of the problems that growing firms had in accessing funding from banks, the Small Firms Loan Guarantee Scheme was established to help facilitate bank borrowing by smaller companies. Running between 1981 and 2009, it supported lending of over £4bn to over 90,000 firms and, not surprisingly, a recent review has suggested that the rationale for such a scheme remains valid today, especially in supporting viable small businesses with a lack of security or track record.

The impact of these initiatives is still felt in 2013, with successor initiatives such as the Enterprise Investment Scheme and the Enterprise Finance Guarantee Scheme – both established by Labour Governments – seen as key policies to encourage growth and enterprise.

So whilst her overall legacy to the UK will continue to be debated for years to come, there is no doubt that the 1980s heralded the beginning of an enterprise culture which remains critically important today.

As Sir Richard Branson noted soon after Lady Thatcher's death was announced, “she really did set the groundwork for entrepreneurialism and business in Britain”, work that continues to this day with the encouragement of a 'can do' spirit of enterprise that changed the UK back into a competitive nation after years of national economic decline.

And to see the changes that her entrepreneurship revolution began over thirty years ago, one only has to look at the simple fact that whilst there were 1.8m businesses in the UK in 1979, this has grown to over 4.9m today, with small firms responsible for the majority of employment in the nation and creating a record number of new jobs.

Therefore, at a time when the UK needs its entrepreneurs more than ever to drive a recovery from the worst economic downturn since the 1920s, it is the enterprise policies of Margaret Thatcher, which were subsequently adopted by all successive governments, that will continue to have the greatest impact on the economy long after her passing.

THE WORLD'S GREATEST INNOVATOR?

In the period following the Second World War, the development of Western economies was characterised by the growth of knowledge intensive industries in electronics, computing, medical technologies and advanced manufacturing.

Whilst large companies have played their role in this development, at the heart of many of these changes have been technical entrepreneurs, namely those individuals who operate within technologically advanced industries that, with a degree of technical expertise, have branched out by themselves and set up organisations that base their competitive advantage on focus on their skills and experience.

With the rapid technological progress occurring in the last decade or so, particularly with the growth of the internet, technical entrepreneurship has become a primary consideration for governments at a regional, national and even transnational levels seeking to encourage, stimulate and sustain increased levels of growth in the field. For example, the Welsh Government has recently announced a £100m fund to help support technical entrepreneurs and the companies they have created in the life sciences sector in Wales.

During the last fifty years, it can be argued that the most famous examples of technical entrepreneurship have emerged from Silicon Valley – the birthplace of modern computing, social networking and online searching – where companies such as Hewlett-Packard, Apple and Facebook have made fortunes for their owners and changed the way we live our lives today.

Yet, in my opinion, the most influential technical entrepreneur that ever lived is not Bill Hewlett, David Packard, Steve Jobs or Mark Zuckerberg. Instead, that accolade should go to a humble English potter born over two hundred and eighty years ago in Staffordshire

The youngest of thirteen children, Josiah Wedgwood was born in 1730 and started in the pottery industry at the age of just 11.  Working in the family firm, he built up his expertise until he left his father’s business when he was 29 to set up on his own.

By this time, Wedgwood had mastered the art of pottery and set about introducing new products, processes and services that resulted in myriad inventions and commercial success on a hitherto unseen scale.

As would be expected of a technical entrepreneur, he came up with new scientific devices for his industry, such as the pyrometer for measuring very high temperatures in kilns.

But he also revolutionised the entire retail industry through introducing a myriad of innovations that we are all familiar with today, including money back guarantees, free delivery, illustrated catalogues, buy one get one free offers, regular sales, travelling salesmen and self-service.

He created the first real mass market by manufacturing affordable and desirable ceramics for the growing industrial classes who couldn’t afford the expensive Chinese porcelain that had dominated the markets for over 200 years previously.

He was also centuries ahead of his time in the way he considered innovation. For example, rather than patenting as most technology entrepreneurs today remain obsessed with, Wedgwood preferred to be first to market and was an early proponent of the open innovation model.

And pre-dating Steve Jobs’ synergy of art with technology by more than two centuries, he encouraged collaborative research through working with artists, customers, friends, rivals, architects and sculptors to develop his products.

He also demonstrated a remarkable aptitude for marketing and branding, and was the first in the ceramic industry to mark his products with his name, denoting ownership of his designs.  He also sought patronage from politicians and royalty alike and using this in his advertising.  Indeed, he used the royal patronage to develop overseas clientele as well, resulting in 80 per cent of his total production being sold abroad by the mid 1780s.

But he was not satisfied only with his business and like Bill Gates two hundred and fifty years later, he wanted to use his fortune to help society.

He took on a prominent role in public life, particularly in the battle for the abolition of slavery. He also helped to create the first British Chamber of Manufactures and played an important role in the development of infrastructure in England during the industrial revolution, building canals, turnpike roads and communications through personal investment in the ports and towns in which his goods were transported through.

Therefore, from inheriting £20 from his father, Josiah Wedgwood built up a very profitable and long lasting dynastic firm that resulted in a personal fortune of £500,000 (around £50m in current prices).

Indeed, it was this legacy that gave his grandson, Charles Darwin, the time to undertake his scientific
studies as a young man and to eventually come up with the theories that would result in one of the most important books ever written, the “Origin of the Species”.

And whilst the firm was hit hard as a result of the global crisis four years ago, collapsing into administration, Wedgwood has thankfully emerged from the rceession with a new owner determined to carry on the legacy of the original founder of the business in Stoke on Trent.

So the next time you are sitting having a cuppa, give a small toast to the man who not only created the ceramic vessel from which you are drinking but who, for his achievements in manufacturing, management, marketing and retail, should rightly be recognised as ‘the world’s greatest innovator’.

THE BUSINESS OF CHRISTMAS

As the dulcet tones of Noddy Holder singing “Merry Christmas Everyone” blares out for the umpteenth time on radio stations all over Britain, it is easy to forget that as we look forward to a few days of overindulgence and TV specials, this particular holiday season has become critical for many parts of the UK economy.

Nowhere is this more so than in the agricultural and food sector, which has been in the doldrums in recent years. According to statistics from the National Farmers Union, 10 million turkeys are consumed every Christmas along with 25 million Christmas puddings, washed down with 250 million pints of beer and 35 million bottles of wine.

In addition, over 8500 tonnes of carrots are sold in the week running up to Christmas with 3000 hectares of land utilised to grow the Brussels sprouts that go onto your Christmas dinner plate.

And it is not only on the dinner table where farmers are benefiting.

As you look at your festive decorations tonight, consider the fact that there are 6 million Christmas trees sold every year, with some having been grown for 20 years or more before they are chopped down for living rooms across the land.

Another key sector to get a major boost from consumers at this time of year is the retail industry. For shops and up and down the land, December’s sales can account for half of the annual pre-tax profits of non-food retailers and, for grocers, equates to about an extra month of sales. The stand out performer was again John Lewis, which reported record receipts for the second consecutive week in December, with sales increasing by 11 per cent as compared to the same time in 2011.

And the good news is that last weekend, it was estimated that Christmas shoppers have spent up to £2billion on present buying with the extra December trading weekend before New Year also promising record sales.

But the High Street is not the only place which is benefiting from increased consumer confidence. Online retail spending has increased by 10 per cent in 2012 and is estimated, by 2016, to accounts for a quarter of total retail spending in the UK. Incredibly, Amazon reports that even on Christmas Day itself, people are busy buying on the internet, with an increase of 263 per cent in online shopping on December 25 over the past five years.

For those of you with young children, have you ever stopped to consider how, every year, you are supporting the biggest toy market in Europe? Toys are worth around £3 billion to the economy with a third of this income being generated at Christmas, equivalent to an incredible 110 million toys that will be unwrapped on 25 December.

Christmas is also the time when companies show their appreciation to their staff through bonuses. Certainly, staff at JCB in Wrexham will be delighted at the announcement last week that all of the manufacturer’s UK employees would receive a £500 Christmas bonus payment. I am sure that others up and down the land will be rewarding their staff for working hard through what has been a difficult year for many firms.

The Christmas Party is also an opportunity for employers to reward staff for all their hard work throughout the year with one night of festive fun. It is also a major boost to the trade of local pubs, clubs and restaurants, and it is estimated that as much as £1 billion is spent every year on these corporate get-togethers. However, recent research has also suggested that hangovers from such parties cost the UK economy as much as £260 million in lost man hours, as a quarter of employees work for fewer than four hours the day after the annual Christmas party because they are suffering ill-effects from the night before, while around a fifth call in sick or show up late.

Despite this, Christmas parties are also providing a boost to both the retail and personal services industry as everyone tries to outdo each other in the office fashion stakes. In fact, research by George at Asda found that 45 per cent of women spend an average of £100 getting ready for the annual office Christmas party, with some spending much as much as £210 on outfits, shoes, make-up and tanning in preparation for their night out.

Therefore, Christmas is not only a time for celebration but is also a critical time for many parts of the UK economy. But let us not forget that the economic benefits of Christmas should not be exclusively for the big department stores, supermarkets and Amazon.
Certainly, if you have yet to finish off your shopping, consider whether you can buy gifts for your loved ones and friends in local shops, thus giving your local High Street the boost it deserves at this time of year.

Nadolig Llawen! Merry Christmas!

THE GLOBAL INNOVATION INDEX AND THE UK ECONOMY

Politicians and policy makers are always wary of league tables produced by independent organisations or academic bodies as they can have a major effect on the way that governments, and their policies, are perceived by the outside world.

For example, PISA - the Programme for International Student Assessment - has become the leading international benchmark for educational achievements.

As a result, education ministers await the results of these tests, which are carried out every three years, with all the nervous trepidation of an A-level student picking up their marks from school in August.

Given this, it is surprising that UK Ministers were not jumping up and down in joy at the latest results from the 2012 Global Innovation Index. Produced by INSEAD, one of the World’s top business schools, and the World Intellectual Property Organization (WIPO), the report ranks 141 economies on the basis of their innovation capabilities and results.

Whilst smaller countries such as Switzerland, Sweden, Singapore and Sweden led the world in overall innovation performance, the UK managed fifth place, ahead of other major economies such as the United States, Germany and Canada. Below is a comparison of the UK's performance on nine key indicators with Sweden and Singapore.

According to the index, the UK is No 1 in indicators such as the cost of redundancy dismissal, ease of getting credit and areas of online creativity. And at a time when our financial institutions are facing considerable difficulties due to issues such as the Libor scandal, it must be noted that they are vital to developing a strong innovative economy – the UK is ranked first on credit and third on investment with regard to financial markets.

There is also evidence that the commercialisation of knowledge is working well with high rankings for not only the creation of knowledge through patenting and scientific research, but also for the economic impact of these activities in the economy.

However, policymakers concerned with the internationalisation of British goods and services will be worried by the 57th global ranking in trade and competition. Certainly, there are lessons to be learnt from countries such as Singapore – ranked first in the World under this measure - that have always prioritised the exports of goods and services as a critical part of their economic and innovation policy.

In a wider context, the report shows worrying trends for the development of the World economy. For example, whilst it is generally accepted that investing in innovation during recessions is essential for enabling quick recovery, research and development expenditures in most leading nations has fallen by an average of 1.6 per cent since 2009. But whilst governments have continued to support investment in higher education research as part of their recovery strategies, the business community has cut back its expenditure in R and D by almost five per cent over the same period.

Going forward, the concern for policymakers is that unless there are changes to political imperatives, the public sector will no longer be able to keep up the same level of research funding to universities, especially if austerity measures continue to bite. As a result, it is critical that the private sector is supported in funding new technologies, products and services over the next few years to make up for any potential shortfall.

The issue of a two track Europe, which has attracted considerable commentary over the last year, also seems to apply in terms of innovation. Indeed, the  study suggests the emergence of a group of innovation leaders in Northern Europe (Sweden, Finland, the United Kingdom, the Netherlands, Denmark) as well as a second group of innovation laggards in southern Europe, including Spain (29th), Portugal (35th), Italy (36th) and Greece (66th).

The question for policymakers in Brussels is whether these four nations, given the state of their public finances, will ever be in a position again to develop their innovation potential and, more importantly, whether the European Commission should continue to spend large amounts of its vast R and D budget on these economies rather than on those economies, such as Finland and the UK, which can achieve far more in terms of their innovation potential.

But it is not only the poorer parts of Europe that are facing issues with innovation.

As economists continue to write volumes on the market potential of the so-called BRIC economies, the report suggests that a lack of investment in innovation could lead to a slowdown in their growth over time. For example, whilst China’s performance in terms of knowledge and technology is amongst the best in the World, there remain considerable weaknesses in the development of a strong innovation infrastructure, an issue that is also prevalent in India, Russia and Brazil.

Therefore, one can conclude that the Global Innovation Index is good news for the UK economy.
It shows that we are doing well on a number of indicators whilst demonstrating that there is a need to do far better in terms of export-related activities. It also suggests the UK has the potential to be a major player in terms of driving forward European innovation policy and, more crucially, remains ahead of the game when it comes to competing with BRIC nations.

However, it also demonstrates, unequivocally that politicians and policymakers should not rest on their laurels. Certainly, any hard earned gains made in innovation in the UK during the last few years can be easily lost if government, because of fiscal pressures, fails to incentivise business to invest in R and D or cuts its own budget to support innovation in the economy.

MARY PORTAS AND REVITALISING THE HIGH STREET IN WALES

Last Thursday, there was finally some good news for the beleaguered high street as figures from the British Retail Consortium revealed that sales in May 2012 were 3.4 per cent higher as compared to a year earlier.

On the same day, 4,500 jobs were saved in 397 stores, including a number in Wales, when Clinton Cards were bought by the US retailer American Greetings. That is not to say that there are still major challenges facing the retail sector. For example, the number of businesses in the UK retail sector going into administration increased by 15 per cent in the first quarter of this year.

These have included household names such as Peacocks, Blacks Leisure, La Senza and Game. Fortunately, as with Clinton Cards, a number of these businesses have been bought out of receivership and, as consequence, jobs have been saved.

Nevertheless, it is estimated that employment in the retail sector has decreased by around 100,000 in the last year and this decline is set to continue unless radical action is taken. That is why the UK Government asked the retail marketing consultant Mary Portas to identify what politicians at national and local level, along with businesses and other stakeholders, could do together to promote the development of new models of prosperous and diverse high streets.

Reporting last December, it made a series of recommendations, including creating a visionary, strategic and strong operational management team for high streets, establishing a new “National Market Day” where budding shopkeepers can try their hand at operating a low-cost retail business and considering whether business rates can better support small independent retailers.

Other suggestions included free controlled parking schemes for town centres, restricting out of town developments, and disincentivising landlords from leaving units vacant. However, to ensure that the report did not merely remain gathering dust on a shelf in Whitehall, Portas suggested that a number of high street pilots should be run to test some of these ideas.

And rather than having civil servants choose which high streets were to benefit from the government’s largesse, towns were invited to put forward their own proposals as to how they would implement their ideas to regenerate their retail sector.

As a result, around 370 high streets submitted applications and last week it was announced that twelve high streets would benefit to the tune of support worth approximately £100,000 each. Some cynical commentators have said that this funding is derisory and the whole scheme was a publicity gimmick at a time when there are far greater economic problems facing retailers. Others have noted that the competition itself has generated real local interest and, regardless of the fact that only around one in thirty applicants were successful, it has enabled communities to come together and plan for their economic futures.

Indeed, you only have to view the hundreds of videos that have been posted on YouTube in support of bids to see local businesspeople demonstrating their passion and conviction for their town centres. The two featured below are from Bedford, one of the winning bids and Burnham on Sea, which didn't win but is already preparing a second bid.

As a result, the failure to win a cash prize will, in itself, probably not stop many of the towns from pursuing their plans, having created a group of stakeholders who have a real interest in the future of their high streets and, more importantly, a strategy for the future.

Unfortunately, as with the start-up initiatives discussed in this column last week, the Portas Review only applied in England and, given the state of many of our town centres, it is a shame that Wales did not participate in such a scheme.

Certainly, given the work already undertaken by Mary Portas, there would be scope to examine this further in the context of Welsh High Streets. Indeed, speaking to a sold-out audience at the world famous Hay Festival last week, the 'Queen of Shops'  said that there was still hope for many town centres in Wales, despite the threat of out of town developments and internet shopping.

And we could start by developing a similar programme to that envisaged for English towns that would enable those with enthusiasm for regenerating our high streets to come together to start a renaissance in the fortunes of many local economies at a time when it is sorely needed.

HALF FULL OR HALF EMPTY? PROSPECTS FOR THE UK ECONOMY IN 2012

Often, it is far easier to be pessimistic about the prospects for the UK economy which, given the fragile state of business and consumer confidence, ends up being a self-fulfilling prophecy. 

With official sources suggesting that the UK economy's growth will be just 0.7 per cent in 2012, it is not surprising that many commentators are queuing up to talk down the economic prospects of the nation.

The latest organisation to support this view is the Chartered Institute of Personnel and Development (CIPD), which predicted that the number of people out of work would reach 2.85 million by the end of next year, with the unemployment rate for the UK rising to 8.8 per cent, the highest figure since 1994.


Of course, it is not only what is going on within Britain itself that is important to our economy and it will be events elsewhere that will probably have the greatest influence on the nation’s recovery during the next twelve months.

The one thing most economists agree on is that the greatest danger to any recovery, regardless of any internal policy decisions by the Coalition government, is the eurozone's debt crisis. Whilst nearly all have predicted that the eurozone could return to recession in 2012, there remains some slight hope and optimism that this will be brief and that growth would follow in 2013 if those eurozone members can finally get their act together over the next few months.

And the potential good news for the UK is that once there is greater certainty over in the eurozone, it is likely that British firms, which are currently hoarding £70 billion of cash, will finally release that money for critical investment later in 2012, creating hundreds of thousands of jobs in the economy (and there was fascinating article yesterday in the Financial Times on this theme).

Whilst Europe remains likely to be in the doldrums for most of 2012, there is better news across the Atlantic in the USA. Not only is confidence growing amongst US consumers but economic figures seem very positive. The growth in GDP for 2011 has been better than predicted and American businesses have been creating more than 150,000 positions every month since September.

And if the World’s largest economy is set to grow next year, then as the USA is our largest export market by country, then it can only be good for British firms.


Therefore, as we begin what could be a tumultuous New Year for the UK economy, is there any hope for optimism, however small?

It is difficult to see any improvement during the first six months of 2012 in the UK economy but if we look beyond that, there are a number of indicators that suggest that we are not in as bad a shape as some would lead you to believe. 

Let’s look at inflation, which has led to increased pressures on households during the last few months. Analysts are now predicting that the consumer price index will continue to fall during 2012, resulting in lower prices and hopefully, encouraging greater consumer spending that could help the economy recover towards the end of the year.

Within British industry, there are signs that the gradual rebalancing of the economy could well be reaping dividends in the long run. Take, for example, the car industry, which is undergoing a major renaissance as companies such as BMW, Jaguar Land Rover, Nissan and Toyota have announced £4 billion of investment into British plants, resulting in predictions of record exports for this year. Indeed, according to the Society of Motor Manufacturers and Traders, car exports will be 19 per cent higher in 2011 and will break all records next year. And it is exactly the type of industry that it needed within the UK, developing highly skilled engineering jobs that are producing high value exportable goods.

The aerospace industry has also being doing well in 2011 with Airbus, which manufactures its wings in North Wales, securing orders for nearly 1400 new planes by the end of November, nearly twice as many as its main rivals Boeing. 

But it is not only large businesses that are having a positive effect.

Barclays Bank recently released data that showed that nearly 480,000 new businesses had been created over the last 12 months.  In addition, the proportion of the self-employed that makes up the labour force is now at its highest level for 75 years. Now those who look through half empty glasses would suggest that people are starting their own businesses because of necessity i.e. that there is no other alternative employment available.

However, those of us who are more optimistic would suggest that this is the beginning of an entrepreneurial renaissance within the UK and one that is long overdue. And here, more than anywhere else, is where government can play a more direct role in these uncertain economic times. Not only can efforts be focused on providing the vital business support and mentoring to get these entrepreneurs through the difficult first two years of the business but they can also ensure that banks, especially those that remain in public ownership, are providing the necessary capital to enable people to start their own businesses as opposed to remaining unemployed.

So, whilst there remain serious challenges, the economic picture may not be as bleak as some would like to paint. Indeed, there is some hope that by the end of 2012, we could finally see the beginning of a revival in the UK’s economic fortunes.

Blwyddyn Newydd Dda, Happy New Year!