IoD Week in Policy 13th-17th December

It’s been a week of broken records this week, and not just because ‘Last Christmas’ has been on repeat in every shop in the high street. Omicron is continuing to wreak havoc across the country. The UK counted a record of just over 88,000 cases yesterday. That’s almost as many as people who are annoyed at Boris Johnson at the moment.

Speaking of which, the rebellion within the Conservative Party is being reported as the biggest Johnson has ever seen during his leadership. 99 MPs voted against the implementation of Plan B, crushing the 55 who voted against added restrictions last year. We’re wondering if this has less to do with the handling of coronavirus, and more to do with the Christmas party scandal. For Boris also broke the record for the number of Christmas parties held last year in the middle of a lockdown.

Another landmark victory or defeat, depending on the way you see it, is the North Shropshire by-election, in which the Lib Dems overturned a 23,000 majority, snatching the seat from the Tories, who had held on to it for 200 years. Uh oh BoJo…

Finally, we secured a Free Trade Agreement with Australia in the quickest time ever for a brand new deal. It is also the first trade agreement to be completely from scratch since we left the EU. Unfortunately, Australia only comes second place for the furthest country away with which we have a deal, coming in closely behind New Zealand.

Becoming accustomed  

• Since the Brexit transition period began, businesses have been experiencing less port in the storm, and more storm at the ports.
• The next complication to overcome is new customs controls on imports from the EU that are coming in January.
• Importers will have to complete a full customs import declaration on goods coming in from the EU. They will also have to submit pre-notifications on products of animal origin.
• Our data shows that 30% of importers are unprepared for these changes.
• We are concerned that lack of awareness for these changes will result in further disruptions to supply chains and added congestion at ports.
• It is incredibly import-ant that business know exactly what they are doing from January to avoid these issues. We have been calling for a ramping up of an awareness campaign by the government, simplifying the guidance, and making it as easy as possible for businesses to access the information they need.

A higher-ing of hiring

• Unemployment is falling. It was down at 4.2% in the three months to October.
• This is encouraging, since there was speculation that the end of the Furlough scheme in September would cause a rise in unemployment. It all worked out though.
• In fact, vacancies are beginning to rise as companies build back and look for new staff.
• Of course, this doesn’t factor in Omicron, which graced us with its presence in early December.
• Fears are that Omicron-related restrictions over the Christmas period will put a spanner in the works of recovery.
• We will find out how resilient our economy is over the next few months.

In the interest of deflation

• To add to our list of records, inflation rose to 5.1% in November, the highest it has been in a decade.
• This is partly driven by disruption to supply chains at an international scale, the demand for fuel, and global shortages.
• Our members have been increasingly worried about inflation.
• In our view, the upcoming rise in employers’ National Insurance contributions is adding further fuel to the inflationary fire.
• On Thursday, the Bank of England made the decision to raise interest rates from the record low of 0.1% to 0.25%.
• This was broadly supported by economists, as a rise in interest rates is seen as a necessary step to offset rising inflationary expectations.

A long-distance relationship

• The UK has signed a Free Trade Agreement (FTA) with Australia.
• It is the first ‘from scratch’ FTA signed since leaving the EU, and completely tailored to British business.
• We think this has come at a good time. We don’t have to hang our heads as much at the performance on the cricket pitch if we have tariff-free trade on goods to think about.
• We are particularly encouraged by the strong focus on services and digital trade, areas which are fast growing for the UK, and where we excel.
• Following a turbulent few years, it is reassuring that our government is pursuing ambitious targets in these sectors.
• However, while this is a positive step, it is important that our local industries are not put under pressure by this deal. Some of our membership have concerns about Australian agriculture, which would introduce unwanted competition to our farmers.
• It is essential that the government does all it can to support our UK based businesses as we begin to implement this deal and others like it.

Week ahead in Policy

Following this rollercoaster of a week, we’re looking forward to the next one being a bit quieter. Since we are hoping there won’t be a huge amount to sum up next week, this report will be the last of the year. Next Friday is Christmas Eve. So, while the hardiest two members of the IoD Policy Team will be still at their desks, the rest of us will be donning our paper hats, eating mince pies, and quickly running to the shops to purchase the last of our Christmas presents. We hope that the rest of our membership will be doing the same.

Merry Christmas everyone!