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Friday's Business and Politics round-up

26 May 2017

Business person stood up, reading a newspaper

IoD in the news

Financial Times - Labour crunch feared as east Europeans head home
The Times - Net migration falls below 250,000
The Independent - Fears for economy as number of EU migrants leaving Brexit Britain surges
Evening Standard - Net migration to UK plunges
City AM - Immigration figures show an "alarming" increase in people leaving the country
The Sun - Number of EU citizens leaving Britain hits a six-year high 

Good morning,

Three days after the horrific terrorist attack on concert goers in Manchester, the UK’s political parties are rolling back into full election mode. Needless to say, the reaction to Monday’s attack will change the tone of the campaigns as they enter the last 14 days, and the sort of knockabout political point-scoring that characterised the first few weeks of the election may now give way to a more sombre contest.

Jeremy Corbyn will re-open campaigning by linking the terror threat at home to Britain’s involvement in foreign wars. In a speech later today, he will warn that the ‘war on terror is simply not working’. Meanwhile, the Prime Minister will use a speech to the G7 today to call on tech companies to do more to police extremist content online.

The campaigns resume as one YouGov poll for this morning’s Times puts the Tory lead over Labour at just 5 points, the narrowest margin between the two parties since Theresa May took over leadership of the Conservatives. The poll puts Labour’s projected share of the vote at 38% (up 3%), with the Tories at 43% (down 1%).

The UK independence party was a little earlier out of the election stalls than its counterparts, having launched its manifesto yesterday morning. The SNP are due to announce their policy platform next week.


Bremigration

Net migration to the UK fell by 84,000 in 2016, with the main driver being increased emigration from the UK to EU countries. Around 117,000 EU citizens left the UK last year – a figure 31,000 higher than the previous year. Meanwhile, the number of people coming to this country from Poland and other eastern European countries halved between 2015 and 2016.

The figures have sparked concerns of a skills shortage for businesses, with the the IoD’s head of employment and skills policy Seamus Nevin saying that the increase in the numbers leaving ‘is a big worry for employers who risk losing key members of staff in positions that cannot easily be replaced from the home-grown pool available’. Moreover, the figures will also have triggered some alarm in the university sector, with the number of people moving to the UK to study also falling by 32,000.

These latest statistics came as the UK Independence Party upped their own anti on migration policy during their manifesto launch. UKIP leader, Paul Nuttall pledged to bring net migration down to zero (effectively one-in, one-out), and said he wanted an ‘immigration policy that is fair to everyone’. The figures also come a week after the Conservative’s re-committed to their target of reducing net-migration to the tens of thousands. Labour, meanwhile, have pledged ‘fair rules and reasonable management of migration’.

Growth interrupted

A slowdown in the UK’s services sector pushed GDP growth to 0.2% in the first quarter of the year.  The figure was lower than the 0.3% predicted by economists and has been attributed largely to the effect of rising prices on consumer facing industries like accommodation and retail. The headline growth figure is significantly lower than the 0.7% recorded in the last quarter of 2016, with commentators suggesting that the sustained pressure on Sterling in the wake of the Brexit vote is finally beginning to be felt in people’s pockets. Last month, the UK inflation rate hit 2.7%, pushing it above average earnings’ growth.

Services account for around 80%of the UK's economic output, and despite slowing growth other areas like construction and manufacturing, the sector has remained relatively buoyant over the past 12 months. Against this backdrop, its underperformance over the past few months will have come as a surprise to many.  However, it’s not all gloomy news as business services and finance continued to perform strongly. The ONS also reported business investment up by 0.6% in the first few months of the year after a contraction at the end of 2016.

Many economists also predict that growth will pick up again in the next quarter, with some suggesting that the timing of Easter this year may have contributed to the slow-down.


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