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Farmer: It’s a bad deal; UK gave away too much
UK farmers are concerned that the British government gave too much away with the Australia/New Zealand trade deal which began at midnight, creating a bad precedent for the future.
Farmer David Barton, the chair of the National Farmers Union’s Livestock Board in the South West of the country, fears there will be a cumulative effect
Barton, who runs a beef suckler herd and grows cereals, told Radio 4’s Today Programme that the UK gave away “so much on this deal”.
He said:
It is such a bad deal because they gave so much away and any other trading nation will want exactly the same deal. So it’ll be the communicative effect over time that will be the problem.
So it may not be Australia on its own, but it will be other nations that want that deal.
The United States will certainly want that same deal of unlimited access to the UK markets. It is an important market, it’s a lucrative market.
Barton also warned of the risk of a ‘race to the bottom’ on food standards, given the differences between the UK and Australian agriculture, saying:
A race to the bottom for cheap food is not the way to sustain food security in the UK.
Plaid Cymru MP Ben Lake, the party’s agriculture spokesman in Westminster, fears the trade deals mark the “beginning of a worrying chapter” for Welsh farming.
Lake warned:
“As negotiations progress with Canada and Mexico, it is crucial that market protections are upheld.
“The UK Government’s evident failure to champion the interests of the Welsh economy in previous negotiations underlines the importance of according the devolved nations a role in future talks.”
Key events
Today’s plan for a new CBI insists the organisation has cultural strengths, including a “Clear purpose”, a “collegial work environment” and “pockets of good practice” (despite the lack of consistent and well-established processes).
But it concedes there are cultural weaknesses, and identifies five:
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Values and behaviours gap: The CBI lacks a shared internal cultural ‘glue’ or foundation of clear values and conduct to guide expectations of behaviours.
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Lack of cohesive, consistent organisational leadership capabilities: Leaders, and the Board, have focused on external goals, with limited oversight of the organisation or attending to risks.
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Under-developed skills for people and team management: Abilities and behaviours needed to manage people and teams effectively and inclusively have been under-valued and under-developed.
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Inattention to people and culture function: People and culture/HR has not been prioritised as a core strategic function with sufficient oversight from leaders and the Board.
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Under-developed and inconsistent infrastructure: There is a lack of clear or consistent structures and processes for decision making. Activities are driven by the priorities of the Director General, with deep organisational siloes.
The governance changes being proposed by the CBI include:
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Accelerated changes in Board membership.
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More frequent Board meetings.
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An enhanced and additional committee structure, including a new People and Culture Committee.
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An external expert Culture Advisory Committee chaired by Jill Ader and supported, amongst others, by Elizabeth Broderick, founder of Champions of Change Coalition.
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A new Chair of Audit and Risk Committee, Victoria Cochrane, former Global Managing Partner, Risk Management at EY.
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Annual re-election of the Board at the AGM.
The CBI is also pledging to produce a Business Manifesto for the General Election, by the end of 2023, and to engagae with ministers and officials to help shape economic debates.
You can read the CBI’s new proposals online, here: A renewed CBI.
Introducing them, president Brian McBride says:
For almost 60 years, the CBI has been the recognised voice of business in the UK, representing the common interests of businesses across all sectors of industry and all regions and nations of the country. In that time, we have also continuously curated and shared best practice from and across industry, as a further service to our members.
The irony contained in the latter point is not lost on me. Whilst striving to represent and support our members to the highest standards, we simultaneously underestimated the daily effort required to maintain a great culture and the operational excellence of a growing CBI. The consequences of that failure, you already know. We share a deep sense of responsibility to put things right, so that we can continue to support you through the vital representation that the CBI provides. This prospectus will tell you how the CBI has changed and is continuing to change, in order to do that.
Ffion Hague to evaluate CBI governance
The CBI has also hired board evaluation expert Ffion Hague to lead a “comprehensive” examination” of its governance structures and processes.
The findings of this work are expected to be shared with the CBI Board and with members by end of July 2023.
Brian McBride, CBI President, says:
“The need to bolster the CBI’s governance structures is something that has come through loud and clear during this period.
We are making significant and fundamental changes to improve our organisation for the better and for the people working in it. We remain determined to restore the confidence of our members, and that of our many stakeholders, in the CBI.”
Hague, a specialist in corporate governance, has been conducting board evaluations for over a decade, working with blue-chip companies including Vodafone, Schroders, Rio Tinto, Marks & Spencer and Centrica, and also the British Red Cross.
Ffion Hague married former Conservative leader William Hague in 1997, having worked in the Civil Service and taught the then-Secretary of State for Wales how to sing the Welsh national anthem.
She has also worked as a broadcaster, includig on the Welsh language TV channel S4C, and wrote a book on the women in prime minister David Lloyd George’s Life.
CBI to recruit new president as part of governance shake-up
Newsflash: The CBI is to recruit a new president as part of a governance overhaul which it has just unveiled.
The business lobby group, which is battling for survival in the wake of sexual misconduct allegations, says it will conduct an “accelerated search” for a successor to president Brian McBride.
McBride, the CBI says, will immediately start the search for his successor while he oversees the changes being implemented at the group. The handover will begin no earlier than 1 January 2024, they add.
This is part of a range of changes set out by the CBI this morning, to changes to its culture and to rebuild ties with government. They are outlined in a prospectus shared with members ahead of a crunch meeting and confidence vote by its members on 6 June.
The measures include creating a new People and Culture sub-committee of the CBI Board that will focus on people and HR matters at the CBI, and an external expert Culture Advisory Committee.
Voting opens on Wednesday, with the results expected to be announced soon after next week’s meeting.
My colleague Anna Isaac reports:
Developed while the group mothballed its activities in April and May, the turnaround plan aims to “transform” the CBI’s culture in the long term, the group said. It follows an independent investigation into its handling of complaints by the law firm Fox Williams and an examination of its culture by the ethics consultancy Principia Advisory.
“We are making radical and rapid changes to upgrade our governance structures and processes,” said the group’s new director general, Rain Newton-Smith.
She added: “Principia’s expert findings show that while our purpose and hard work to influence and inform on behalf of our members gives us a strong identity and motivates our staff, that focus has come at a cost. Blanket accusations of the CBI’s culture being toxic are not correct, but we have work to do to embed a consistent set of values for all of our staff.”
More here:
People getting a poor interest on their bank savings should “shop around”
Back in the UK, a government minister says that people who feel they are getting “very poor” interest on their savings from their bank should “shop around and find one that will pay a better rate”.
This is a hot issue, with banks slow to pass on the recent increases in Bank of England interest rates to savers.
Yesterday. Which? waned that the high street banks are shortchanging customers by hundreds of pounds every year, with measly savings rates.
Ttoday, Work and Pensions Secretary Mel Stride was asked by Kay Burley on Sky News what the Government should do about banks who are not offering competitive levels of interest rates for savers.
Mr Stride, who chaired the Treasury Select Committee for three years, said:
“I think, broadly speaking, the banking and financial services sector is a relatively efficient and highly competitive marketplace.
“So you would expect as one particular bank starts changing rates others to follow, but it is sticky, and of course, Government, the Business Department and Treasury and others are often involved in discussions with banks about exactly those kinds of things.”
Stride stressed it is a “free market”, before adding:
“My advice generally would be if you feel you’re getting a very poor rate with one particular institution is shop around and find one that will pay a better rate, and there are those out there.”
The UK’s City watchdog is introducing a new “consumer duty” this summer, which may may trigger a clampdown on those banks who are not offering fair rates to consumers.
ECB’s de Guindos: Positive news on eurozone inflation
The drop in euro zone inflation seen in regional data over the past two days has been bigger than forecast and point in the direction of a continued slowdown in price growth, European Central Bank Vice President Luis de Guindos says.
“The data that we received yesterday and today is positive,” de Guindos told a news conference this morning.
He added (via Reuters):
“Clearly the decline has been bigger than what was discounted by analysts and I think that is positive news.”
“The news we are receiving now is positive and goes in the direction of an important decline in headline inflation.”
Yesterday, data showed that Spain’s annual inflation rate fell to 3.2% in May, down from 4.1% in April.
On an EU-harmonised basis, inflation in Spain dropped to 2.9%, its lowest level for almost two years, which boosted hopes that price pressures will ease quickly across the eurozone.
We get the overall eurozone inflation report tomorrow morning, with Italian data due in a few minutes, and German’s CPI report at lunchtime today.
As well as the welcome fall in French inflation (see earlier post) we also have confirmation that France’s economy grew by 0.2% in the first quarter of this year.
However, new data shows that French household consumption fell by 1% in April, indicating that demand for goods weakened (which will have put downward pressure on inflation too).
Charlotte de Montpellier, ING’s senior economist for France and Switzerland, says it is clear that the French economy is slowing sharply.
De Montpellier says:
The second quarter got off to a poor start in France, with household consumption falling for the third consecutive month in April, and the outlook has been revised downwards. Against a backdrop of falling demand, inflationary pressures are moderating more quickly than expected.
These figures show that the second quarter got off to a poor start. It is clear that the French economy is slowing sharply.
The prospect of a recovery later in the year seems to be fading. This has led us to revise our GDP outlook to 0.6% in 2023.https://t.co/lAyn0mNUkX
— ING Economics (@ING_Economics) May 31, 2023
Following the fall in China’s factory output this month, Hong Kong’s Hang Seng share in index is down over 2% today:
The Hang Seng index is 20% below its January peak – approaching what is considered a technical bear market, reports CNBC, adding:
Analysts had initially expected China’s economy to recover faster and earlier than expected, but that view quickly faded after the country continued to deliver disappointing economic data.
Tech stocks have been leading the selloff:
Hong Kong’s Hang Seng Tech index has fallen over 25% since January, reflecting the struggling Chinese economy. Disappointing economic data and weak factory activity readings below the growth-contraction benchmark indicate a slower-than-expected …
Read More :… pic.twitter.com/zYvS8dCHwe
— CoinUnited.io (@realCoinUnited) May 31, 2023
French inflation drops
Economic news: Inflation across France has fallen, and by more than expected.
French consumer prices rose by 5.1% year-on-year in May, according to new estimates from statistics body Insee. That’s down from 5.9% in the year to April.
Insee estimates that consumer prices dropped by 0.1% during March, after rising by 0.6% in April, helped by a slowdown in food prices and services costs.
This is a boost to squeezed households and also the European Central Bank, which has raised interest rates since last summer to fight inflation.
Insee says:
This decrease in inflation should result from a year-on-year slowdown in prices of energy, food, manufactured goods and services. The prices of tobacco should accelerate for the third consecutive month.
On an EU-harmonised basis, French inflation fell in May. The Harmonised Index of Consumer Prices is estimated to have risen by 6.0% this month, down from 6.9% in April. That’s the lowest level in a year, Bloomberg points out.
In the City, shares in gambling group Entain have dropped 3.3% after it told shareholders it expects to incure a “substantial financial penalty” as part of an investigation by Britain’s tax authority.
In a statement, Entain said it is negotiating a deferred prosecution agreement (DPA) with the with the Crown Prosecution Service (CPS) and is working towards resolving an investigation by HMRC.
HMRC is examining “potential corporate offending” by a former Turkish subsidiary of Entain, whose brands include Ladbrokes, Coral, Gala and partypoker.
Entain told the City:
The Company understands that the HMRC investigation, which is ongoing, includes a review of its former Turkish-facing business and acknowledges that historical misconduct involving former third party suppliers and former employees of the Group may have occurred.
The Group continues to co-operate fully with HMRC and the CPS.
Australian exports are hoping for a boost to business through the new free trade deal with the UK.
Australian producers of wine, beef, sheep meat, grains, rice, sugar and dairy products will benefit from duty-free quotas or tariff elimination.
Manufactured products such as auto parts and electrical equipment, as well as cosmetic products, will also receive a boost through the immediate elimination of UK tariffs.
But going the other way, British products including cars, whisky, confectionery, biscuits and cosmetics coming into Australia are expected to be cheaper.
The Australian assistant trade minister, Tim Ayres, said the deal would provide more opportunity for exporters, firms and workers.
He told ABC News Breakfast.
“They are one of our oldest friends of course, the United Kingdom, but this is a new chapter in the economic relationship and it means means new opportunities for Australian businesses.”
More here:
Farmer: It’s a bad deal; UK gave away too much
UK farmers are concerned that the British government gave too much away with the Australia/New Zealand trade deal which began at midnight, creating a bad precedent for the future.
Farmer David Barton, the chair of the National Farmers Union’s Livestock Board in the South West of the country, fears there will be a cumulative effect
Barton, who runs a beef suckler herd and grows cereals, told Radio 4’s Today Programme that the UK gave away “so much on this deal”.
He said:
It is such a bad deal because they gave so much away and any other trading nation will want exactly the same deal. So it’ll be the communicative effect over time that will be the problem.
So it may not be Australia on its own, but it will be other nations that want that deal.
The United States will certainly want that same deal of unlimited access to the UK markets. It is an important market, it’s a lucrative market.
Barton also warned of the risk of a ‘race to the bottom’ on food standards, given the differences between the UK and Australian agriculture, saying:
A race to the bottom for cheap food is not the way to sustain food security in the UK.
Plaid Cymru MP Ben Lake, the party’s agriculture spokesman in Westminster, fears the trade deals mark the “beginning of a worrying chapter” for Welsh farming.
Lake warned:
“As negotiations progress with Canada and Mexico, it is crucial that market protections are upheld.
“The UK Government’s evident failure to champion the interests of the Welsh economy in previous negotiations underlines the importance of according the devolved nations a role in future talks.”
Signed Beanos heading down under
Two handpicked consignments of UK goods including signed copies of the Beano are heading to trade ministers of Australian and New Zealand, to mark the new trade deal that came into effect at midnight.
International trade minister Nigel Huddleston was expected to tour DHL’s Southern Distribution Centre near Heathrow to see the two shipments.
British goods from across the country including Beano comics signed by the comic’s editor John Anderson, Penderyn single malt Welsh whisky, Brighton Gin, The Cambridge Satchel Co. bags and Fever-Tree mixers are among the items being sent.
The parcels will also include an England cricket top signed by James Anderson and Emma Lamb, a Wales rugby shirt signed by the men’s team and a tennis racket from Gray’s of Cambridge.
UK’s first post-Brexit trade deals with Australia and New Zealand begin
Good morning, and welcome to our rolling coverage of business, the financial markets and the world economy.
The UK’s post-Brexit trade deals with Australia and New Zealand came into force at midnight, but the economic impact may be relatively slight.
Under the first new trade arrangements struck since the UK left the European Union, the tariffs on all UK goods exports to Australia and New Zealand have been removed. It also removes UK import tariffs on the majority of goods from Australia and New Zealand.
The government says services markets have been opened up – something welcomed by the Law Society, for example – and that red tape has also been slashed for digital trade and work visas.
Hailing the deal, business and trade secretary Kemi Badenoch said:
“Today is a historic moment as our first trade deals to be negotiated post-Brexit come into effect.
“Businesses up and down the country will now be able to reap the rewards of our status as an independent trading nation and seize new opportunities, driving economic growth, innovation and higher wages.”
However…. the impact assessment of the deals shows that, in the long run, they would lift UK gross domestic product (GDP) by around £2.3bn “in the long run”. That’s when compared to projected levels of GDP in 2035, in today’s prices, without the agreement.
Former Conservative environment secretary George Eustice admitted last November that the UK’s post-Brexit trade deal with Australia was “not actually a very good deal” for Britain.
Eustice said the UK had given away “far too much for far too little in return”, as it strove to agree it’s first “from scratch” agreement.
According to Eustice, the then-trade secretary Liz Truss placed the UK in a poor negotiating position, by setting an arbitrary target to conclude an agreement by the time of a G7 summit.
The deal could give younger Britons the opportunity to experience Australia, thanks to the expansion of the shared Youth Mobility and Working Holiday Maker visa schemes.
On July 1 2023, the age limit for UK applicants going to Australia will go from 30 to 35 years old, and from July 1 2024, Brits will be able to stay in Australia for up to three years without having to meet specified work requirements.
Also coming up today
We’ll find out if Europe’s cost of living squeeze eased this month, with new inflation data from France, Italy and Germany due. They’re all expected to show a fall, says Michael Hewson of CMC Markets, adding:
While this is expected to offer further encouragement that headline inflation in Europe is slowing, that isn’t the problem that is causing investors sleepless nights.
It’s the level of core inflation and for that we’ll have to wait until tomorrow and EU core CPI numbers for May, which aren’t expected to show much sign of slowing.
And in the UK, passengers are bracing for the first of three rail strikes this week as services in England come to a standstill amid a long-running dispute over pay and conditions.
Members of the drivers’ union Aslef will embark on a 24-hour strike on Wednesday. The union also plans to strike on Saturday.
On these days, no trains will run on networks including Avanti West Coast, Chiltern Railways, CrossCountry, East Midlands Railway, Great Northern, Southern, Southeastern, Thameslink and Northern.
The agenda
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7.45am BST: French inflation report for May
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8.55am BST: German unemployment report for May
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10am BST: Italian inflation report for May
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1pm BST: German inflation report for May
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1.30pm BST: Canada’s Q1 GDP report
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5pm BST: FTSE quarterly reshuffle announced
China’s factory activity falls faster than expected as recovery stumbles
The start of the UK’s trade deals with Australia and New Zealand comes as concerns grow over the health of the global economy.
Slowdown fears are swirling through markets after China’s factory activity contracted for the second month running.
Weakening demand hit Chinese manufacturers this month, suggesting activity is easing off – a worrying sign.
The official manufacturing purchasing managers’ index (PMI) fell to a five-month low of 48.8 in May, data from the National Bureau of Statistics (NBS) shows. That’s down from 49.2 in April, and below the 50-point mark that separates expansion from contraction. Economists had hoped for a rise to 49.4.
It’s the biggest drop in output since Beijing ended its zero-Covid policy in December.
The slowdown could prompt China’s government to consider stimulus policies to support the economy.
Ipek Ozkardeskaya, senior analyst at Swissquote Bank, explains that China’s recovery is taking longer than hoped.
We shouldn’t expect China to post growth numbers comparable to levels pre-2020 because China under Xi Jinping’s rule is willing to avoid euphoric, and unhealthy growth.
This is why the government put in place severe crackdown measures on real estate, tech and education. That does not mean that China won’t get back in shape, but recovery will likely take longer, and growth will likely be more reasonable and a better reflection of the reality of the field.
The PMI data has helped to push Asia-Pacific stock markets lower. China’s CSI 300 has dropped 1%, while Japan’s Nikkei has lost 1.6% – its biggest daily decline since 5 April.
Australia’s S&P/ASX 200 is down 1.65%, reflecting the close economic links with China.
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