UK economy starts Q4 on weak note as Brexit hits orders

Britain had been due to leave the European Union on Oct. 31 which prompted limited stockpiling by businesses and households. (AFP)
Updated 05 November 2019

UK economy starts Q4 on weak note as Brexit hits orders

  • Britain had been due to leave the European Union on Oct. 31 which prompted limited stockpiling by businesses and households
  • But Brexit has now been delayed until Jan. 31, 2020

LONDON: Britain’s economy got off to a weak start to the final quarter of 2019, according to surveys which showed the giant services sector stagnated last month, with concerns about Brexit depressing new orders, while consumers stayed cautious.
Britain had been due to leave the European Union on Oct. 31 which prompted limited stockpiling by businesses and households.
But Brexit has now been delayed until Jan. 31, with an election on Dec. 12 raising further uncertainty.
The IHS Markit services Purchasing Managers’ Index (PMI) edged up to 50.0 — which represents zero growth — from 49.5 in September, which was one of the lowest readings since Britain was last in recession in 2009.
The all-sector PMI, covering manufacturing and construction as well as services, remained below 50 for a third month in a row, the first time this has happened since 2009.
“The underlying business trend remains one of stagnation at best,” IHS Markit economist Chris Williamson said.
October’s PMI readings on their own were consistent with a 0.1 percent quarterly fall in overall economic output, Markit said.
Britain’s economy has lost momentum this year, hurt by a global downturn due to the US-China trade war as well as increased Brexit uncertainty.
In the euro zone, the manufacturing PMI contracted even more sharply than in Britain, reflecting the bloc’s greater reliance on exports to China.
British consumer spending has been more resilient than business investment, but surveys on Tuesday showed a slowdown here too.
The British Retail Consortium said high street spending rose 0.6 percent in October, the most since April. But on a rolling basis sales have grown by an average of just 0.1 percent over the past 12 months, the lowest on record.
Barclaycard data showed spending growth slowed to 1.5 percent from 1.6 percent last month, and the Society of Motor Manufacturers and Traders reported a 7 percent annual fall in new car sales.
A brighter note came from a survey by HSBC which, in contrast to most others, showed businesses were cheerier about export prospects than a year ago.
Businesses have struggled to plan around deadlines for leaving the EU that have changed three times this year, leading to volatility in official figures that has not always been tracked by the PMI.
Official data showed the economy shrank by 0.2 percent in the three months to June as businesses dealt with an overhang of raw materials bought before the original March 29 Brexit deadline.
Most economists expect a limited rebound in the third quarter, meaning Britain would dodge a recession.
But the overall picture is muted, with Morgan Stanley — one of the gloomier forecasters — predicting growth of just 0.2 percent in the third quarter and stagnation in the fourth.
The Bank of England is due to update its growth forecasts on Thursday but economists polled by Reuters do not expect any change in interest rates ahead of December’s election.
The opposition Labour Party plans to renegotiate Brexit and put the revised deal to a referendum. It also promises a significantly more interventionist approach to the economy.
For now, businesses surveyed by IHS Markit say Brexit worries are reducing orders, which fell in October by their most in six months for services businesses. On the all-sector measure, orders fell at the third-fastest rate since 2009.


Getting more women into leadership positions top priority: CEO

This June 23, 2018 photo, shows a general view of Riyadh, Saudi Arabia. (AP)
Updated 18 January 2020

Getting more women into leadership positions top priority: CEO

  • Saudi Arabia is focusing on the Business 20 (B20), making this one of the key engagement groups. Women in Business will be Saudi Arabia’s signature topic

RIYADH: The boss of one of Saudi Arabia’s biggest banks says that getting more women into leadership positions is a top priority.
Samba CEO Rania Nashar chairs the action council for Women in Business created by the Business Twenty (B20), which is the official G20 dialogue with the business community. It represents the global business community across all G20 member states and all economic sectors.
She said the council was set up to boost women’s particpation not only in business but also in global leadership positions.
During the launch of the B20 in Saudi Arabia this week, Nashar highlighted the under-representation of women in the economy.
“There is a gap of 27 percent between male and female workers; 75 percent of males are part of the labor force while only 48 percent of females are working,” she said.
She said it was important not to just talk about women as workers but as business owners.

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Saudi Arabia will host the 15th G20 Summit in Riyadh on Nov. 21-22, 2020.

“That’s why entrepreneurship is very fundamental to our task force,” she said.  “The majority of the finance development programs have incentives for giving loans to females; however, despite the fact that many large borrowers are females, the amount of loans granted to them is far below what is granted to males,” she added.
Nashar said that two-thirds of female business founders feel that they were not taken seriously by investors when they pitch for investments. They also feel that they are treated differently from their male counterparts.
Saudi Arabia will host the 15th G20 Summit in Riyadh on Nov. 21-22, 2020. The Kingdom is focusing on the Business 20 (B20), making this one of the key engagement groups. Women in Business will be Saudi Arabia’s signature topic.