Manufacturing growth at 30-year high – business news 2 June 2021.

James Salmon, Operations Director.

Manufacturing growth at 30-year high, UK’s healthcare spend hits £269bn, ‘Crunch point’ fear for small firms, Financial services exports down by £30bn, House Prices up 11% and lots more

Manufacturing growth at 30-year high

The IHS Markit/CIPS Manufacturing Purchasing Managers’ Index (PMI) reached a high of 65.6 in May, up from 60.9 in April.

The reading, on an index where a figure above 50 indicates growth, is the highest since the survey began in 1992.

IHS director Rob Dobson said: “Record growth of new orders and employment supported one of the steepest increases in production volumes in the near 30-year survey history”. He added that the easing of restrictions has boosted growth, with this “being felt across the globe, as highlighted by a record rise in new export business”.

While growth increased, the report warns that many suppliers are struggling to keep up with increased demand, with this driving up average delivery times to manufacturers and leading to the highest rise in the cost of supplies since the survey began in 1992. This in turn has seen manufacturers increasing their own prices.

Reflecting on the findings, KPMG’s Simon Jonsson said: “Confidence is high among manufacturers as demand continues to soar, but there’s a danger that many are only seeing the weather in front of them.”

UK’s healthcare spend hits £269bn

The UK spent £269bn on healthcare last year, an increase of £53.8bn on the year before as the pandemic drove up expenditure.

The figure, which covers spending by the Government and households, represents the biggest increase since comparable figures were first compiled in 1997. The growth was largely driven by a 25% cash-terms climb in Government healthcare expenditure.

Non-government spending stood at around £49bn, an increase of 2% in cash terms on 2019. The Office for National Statistics figures show spending was equivalent to 12.8% of total GDP, up from 10.2% in 2019.

ONS statistician Jonathan Athow said: “The unprecedented effects of the pandemic have seen spending on health rise at a rate not seen in modern times.”


The U.K. recorded no new Covid-19 deaths for the first time since the global pandemic began, bolstering demands for Prime Minister Boris Johnson to lift restrictions as planned this month. Businesses are calling for restrictions to be eased by scientists are warning that we are still far from reaching herd immunity and new variants continue to be a cause of serious concern.

FSB: ‘Crunch point’ fear for small firms

The Federation of Small Businesses (FSB) has warned that many small firms will be frustrated that Scotland has “gone from lockdown to slowdown”, arguing that the decision to delay plans to ease restrictions in much of the country is a case of “two steps forward but one step back”. Andrew McRae, FSB’s Scotland policy chairman, said “patience and cash reserves are in short supply”, warning: “From the start of July, the furlough scheme will begin to get wound down but it looks like businesses in Scotland will still face substantial trading restrictions.” Calling on Scottish and UK officials to avoid a “crunch point”, Mr McRae said there is a need for “urgent financial help to firms who took on workers in anticipation of greater freedoms but now can’t furlough these employees.”

Financial services exports down by £30bn

Academics at Aston University have found that Britain’s financial services exports have fallen by almost £30bn since the UK voted to leave the EU, leading to calls for the Government to secure a trading deal on financial services with the EU. Jun Du, professor of economics at Aston Business School, said: “Looking ahead, it’s clear that there are hard negotiations still to be had on crucial issues such as cross-border data sharing and passporting rights for financial services firms. The UK should be striving for a close relationship with the EU in these areas to stem the loss of services trade from the City of London and elsewhere.”


Wickes Group said yesterday its 2021 profit will be at the higher end of market expectations, as the home improvement boom drives sales. Adjusted pretax profit in the first half of 2021 will be around £45 million following stronger-than-expected core sales growth in the year to date, the Watford-based building supplies retailer said. That’s after like-for-like sales grew 46% in the year to May, compared to the same period in 2020, Wickes said. Trading was “notably strong” in April driven by sales in the local trade and DIY divisions, while trading in May settled back in line with expectations.


Despite surging oil prices and growing demand, OPEC+ held fast to its policy of gradually increasing supply. By July global output is targeted to be just 2m barrels-per-day greater than in April 2021.

House Prices

House Prices soared 10.9% in the year to May, the highest level in 7 years, according to Nationwide. The average house price has risen to £242,832, up £23,930 over the past year, with buyers now seeking larger homes and properties with gardens, Nationwide said.

The  temporary suspension of stamp duty and low interest rates have fueled demand.  By evening, this elicited expressions of unease from the Bank of England, with Deputy Governor Dave Ramsden telling the Guardian that “there’s a risk that demand gets ahead of supply and that will lead to a more generalized pick-up in inflationary pressure,” adding, “that’s something we are absolutely going to guard against.”

Nationwide said market activity has been driven by a “a race for space” as buyers seek larger homes and properties with gardens, with the impact of the Chancellor’s decision to extend the stamp duty holiday also noted.

Robert Gardner, Nationwide’s chief economist, said that while the first lockdown saw housing transactions fall to a record low of 42,000 in April 2020, “activity surged towards the end of last year and into 2021, reaching a record high of 183,000 in March”.

Nationwide said it expects the market to remain “buoyant” over the next six months but warned that if unemployment rises sharply towards the end of the year, “there is scope for activity to slow, perhaps sharply”.

Howard Archer, chief economic adviser to the EY Item Club, expects the housing market “to show vigour in the near term and a further firming of prices” but said EY Item Club “suspects house prices will lose momentum again later on this year and could well be flat year-on-year by mid-2022”.


Ryanair carried 1.8m passengers in May, up from just 70,000 in May 2020, a 2,470 per cent increase as the green shoots of the economic recovery continue. In April this year the Ryanair flew 1m passengers. The surge in year-on-year passenger numbers reflects the fact that most of Europe was locked down and airports remained deserted a year ago during the pandemic’s first wave.

OECD head optimistic over global tax

OECD Secretary-General Mathias Cormann says he is “quietly optimistic” about reaching an international deal on taxing multinational companies, declaring that proposals from US President Joe Biden are a “game changer.” With more than 140 countries taking part in talks over a global minimum for corporate taxation to deter big companies from shifting their profits to low-tax jurisdictions, Mr Cormann was asked about the likelihood of a deal being agreed. He said that there are “a lot of conversations still on the way”, adding that while “you don’t get too far ahead of yourself … I’m quietly optimistic.” President Biden has proposed setting a minimum global corporate tax rate of at least 15%, with the US set to increase its own corporate tax rate from 21% to 28%. Pointing to the US’ stance, Mr Cormann commented: “I think the approaches taken by the Biden administration in relation to this issue have been a game changer”.

Biden tax plan could earn UK and EU billions

A study from independent research organisation the EU Tax Observatory suggests a 15% global corporate tax rate proposed by US President Joe Biden could reap the EU £43bn a year, while a 25% rate would earn nearly €170bn extra a year for EU governments. The EU Tax Observatory report also details how extra tax pulled in from multinationals headquartered in the UK could see Treasury coffers boosted by billions a year.

EU agrees tax transparency deal

EU government and parliament negotiators have reached a deal on rules that will force large multinational companies to disclose how much revenue and tax they pay in the bloc, as well as in countries the EU deems to be tax havens. The law, which was initially proposed by the European Commission in 2016, will see multinational corporations with a turnover of more than €750m annually in two consecutive years have to declare profits, tax and number of employees in EU countries and in countries on the EU list of non-cooperative jurisdictions. Data on tax paid in other countries outside the EU and not on the tax havens blacklist will only be given in aggregated form. Tax Justice Network analysis suggests EU countries are responsible for 36% of tax lost globally to corporate tax abuse, costing countries worldwide over $154bn a year as profits are shifted to low tax jurisdictions.

Cash concern for EFL clubs

Research from Begbies Traynor shows that nearly half the clubs in the English Football League are facing money troubles, with the pandemic hitting their finances. Of the 72 teams in the English Football League, 33 were showing signs of financial difficulties last month – up from 17 a year ago. Begbies Traynor’s annual Football Distress Survey says that while the Treasury’s coronavirus support measures such as loans and rates relief have helped keep clubs afloat, they still have a “wall of debt” to pay. The firm’s Gerald Krasner said that while Government support has given clubs “much-needed extra time”, the full financial effects of the pandemic “are yet to be fully felt.”

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