The Times - UK (2020-12-02)

the times | Wednesday December 2 2020 1GM 43

Business

Real GDP

Private consumption

Private investment

Index 2019 Q4 = 100

2019 2020 2021 2022

110

100

90

80

70

60

UK GDP and spending

compared with Q4 2019

GDP forecasts, OECD 2020 2021

UK -11.2

4.2

France -9.1

6

4.3

Italy -9.1

Germany -5.5

2.8

Canada -5.4

3.5

Japan -5.3

2.3

US -3.7

3.2

World -4.2

4.2

Eurozone -7. 5

3.6

China 1.8

8

Bakkavor ‘must act’

after Covid death

A supplier of ready meals

to some of Britain’s biggest

supermarkets is under

pressure to introduce mass

coronavirus testing for

staff after an employee at

one of its factories died

from Covid-19.

Bakkavor, which pro-

vides fresh and chilled pre-

pared meals to super-

markets including Marks &

Spencer, Tesco and Wait-

rose, said yesterday that a

worker at one of its salad

processing factories in

Tilmanstone, Kent, had

died from the virus.

GMB, the trade union,

has called on the FTSE 250

company to close the site

temporarily to allow for a

deep clean and the mass

testing of staff. Almost one

in ten of the 900 workers

employed at the factory

have contracted the virus

in the past week, double

the number from the week

before. Sixty-nine have

been told to self-isolate.

The staff member, who had

worked at the plant since

April 2019, is understood to

have died last week.

In April the company’s

head of operations was

filmed telling employees in

north London that they

faced losing their jobs if

they missed work during

the pandemic. In August,

all workers at a dessert

factory in Lincolnshire

were tested after 70 staff

fell ill with the virus.

A spokesman for the

company said there was

“no evidence” that the

deceased worker had con-

tracted Covid-19 inside the

factory. He said that the

company was working

with Public Health Eng-

land to ensure the safety of

its staff. “We have stringent

safety controls in place,” he

said.

Shares in Bakkavor fell

by 1¾p, 2.1 per cent, to 81p.

Tom Ball

ing economic performance, suggesting

not all measures have been used

wisely,” Laurence Boone, the OECD’s

chief economist, said.

A no-deal Brexit would compound

Britain’s economic troubles, the OECD

said. “Failure to conclude a trade deal

with the EU by the end of 2020 would

entail serious additional economic dis-

turbances in the short term and have a

strongly negative effect on trade, pro-

ductivity and jobs in the longer term.”

The bleak picture for Britain was in

contrast with more positive noises

about the global outlook. “Progress with

vaccines and treatment have lifted

expectations and uncertainty has

receded,” Ms Boone said. The global eco-

nomy is expected to contract by 4.2 per

cent this year, but to rebound 4.2 per cent

next year and by 3.7 per cent in 2022.

Only Argentina,

with a 7.9 per cent

shortfall in GDP,

fares worse than

Britain, according

to the OECD

House prices rise at fastest in six years

Growth in house prices accelerated last

month to its highest rate in almost six

years, Britain’s biggest building society

said yesterday, but market activity is at

risk of slowing sharply.

Prices rose by 6.5 per cent year-on-

year in November to an average of

£229,721, a pick-up on the 5.8 per cent

growth in October, according to

Nationwide. Month-on-month prices

rose by 0.9 per cent from 0.8 per cent in

October.

Despite rising unemployment and

signs that the economic recovery had

lost momentum before the latest lock-

downs, the property market has been

buoyed by the stamp duty holiday,

which is due to end on March 31. Until

then no stamp duty is due on home

purchases below £500,000; the tax

break is worth up to £15,000 for buyers.

Property transactions rose to

105,600 in October, the highest level

since 2016, and mortgage approvals for

house purchases were at their highest

level since 2007 at about 97,500, figures

from the Bank of England show.

The housing market has been

boosted, too, by pent-up demand

released when the first Covid-19 lock-

down ended in the summer as people

sought larger properties with more out-

door space that were better suited to

working from home.

Robert Gardner, Nationwide’s chief

economist, said that the outlook

remained “highly uncertain” and that

housing market activity was likely to

slow, “perhaps sharply, if the labour

market weakens as most analysts expect,

especially once the stamp duty holiday

expires”.

Economists expect unemployment to

rise above 7 per cent after the furlough

scheme is withdrawn at the end of

March. Pent-up demand is likely to have

faded by then and the stamp duty relief

will have expired. Analysts believe that

the combination of these factors will

cause the property market to go into

reverse next year.

Andrew Wishart, at Capital Econo-

mics, the consultancy, said that prices

would fall by 5 per cent in 2021. “We

aren’t expecting a house price crash,” he

said. “With a vaccine likely to be rolled

out in the first half of 2021, we think that

the economy and employment will re-

cover quickly, preventing a prolonged

fall in prices.”

Nationwide said that the outlook for

the housing market would depend

“heavily on how the pandemic and the

measures to contain it evolve”.

Nationwide has found that almost

30 per cent of prospective home movers

wanted a garden or more outdoor space

and a quarter wanted to get away from

the “hustle and bustle of urban life”.

Government plans to create new

national parks in England mean that

prices in those areas are likely to rise.

Nationwide’s research found that homes

located within a national park attract a

20 per cent premium over an otherwise

identical property — about £45,000 in

cash terms, based on the present average

UK house price.

Stockpiling boost for manufacturers

Brexit-related stockpiling

helped the manufacturing

sector to expand last month

at its fastest pace in almost

three years, a survey

suggests (Gurpreet Narwan

writes). The IHS Markit/CIPS

purchasing managers’ index

rose from 53.7 to 55.6, its

highest reading since

December 2017 and above

the “flash” reading of 55.2.

The end of the Brexit

transition period on

December 31 could lead to

tariffs on goods traded

between the UK and

European Union. Factories

have been stockpiling raw

materials and European

customers have brought

forward orders to beat the

deadline. Businesses fear

that even if Britain and the

EU agree a trade deal by the

end of the year, there still

may be delays at ports.

“The upcoming end to

the Brexit transition period

led to rising levels of input

purchasing, stockpiling of

raw materials and stronger

gains in export business,”

IHS Markit said.

There was the biggest

rise in purchases of raw

materials in November

since March last year, the

biggest rise in export orders

since January 2018 and the

sharpest boost to optimism

since 2014.

While stockpiling helped

to lift exports, growth in

new orders slowed

modestly because domestic

demand was weaker amid

rising unemployment and

the English lockdown.

Output growth in

November was led by the

intermediate and

investment goods sectors.

Consumer goods

production and new orders

fell for a second month.

“This fuels suspicions that

the lockdown and other

restrictions, along with

increased caution, will hold

back consumer spending,”

Howard Archer, chief

economic adviser to the EY

Item Club, said.

Factories across Europe

faced a similar challenge as

coronavirus restrictions

dampened demand for

consumer goods. IHS

Markit’s manufacturing PMI

for the eurozone fell from

54.8 to 53.8 in November.

Alex Ralph, Gurpreet Narwan