Good retail sales and no shop price inflation

The April retail sales figures were good. Total sales were up 6.3%. The delayed Easter reduced the March figures and flattered the April ones as I argued at the time of the March release. We can now see the underlying pattern, which is still one of decent growth. Food has been stronger than non food, with the BRC itself saying that taking the two months of March and April together food sales “were up by around 4% on last year, exceptional growth by all recent standards”. More importantly, there was no overall shop price inflation, giving the lie to those who have argued rising prices will follow from a weaker pound.

Why haven’t prices risen as some said? There is considerable competition in world goods markets. There is even more competition in UK retail. The main store groups have increased their trading areas at the same time as on line retail has provided formidable competition to them. Discount retailers have kept their prices down, whilst use of the web has enabled shoppers to look around for the best deals especially for the larger items. The pound is now strengthening again, some 8% up on its lows. I do not expect that to suddenly cut prices, just as I did not expect a price surge from the previous falls in sterling.

The construction outlook has also brightened. Recent figures imply good growth in house building coming through, and a quickening of the pace in industrial property. New offices are weaker. Overall the PMIs and the recent starts figures point to a growing industry with more investment in buildings.

It is interesting to note that the FTSE 250 Index of smaller companies with more UK business as a proportion is now up by one third since June 27th 2016, whilst the large companies in the FTSE 100 with more exposure to foreign currency earnings are up by 23%.

Published and promoted by Fraser McFarland on behalf of John Redwood, both at 30 Rose Street Wokingham RG40 1XU

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Mr Macron guides France

There is a lot of nonsense talked about how the election of Mr Macron will lead to a much tougher French stance over Brexit. Mr Macron, after all, was not so long ago a Minister serving the outgoing President, who has not been critical of the outgoing President’s stance on all this. Anyone leading France will of course be putting EU and French interests first, but this does not mean they will wish to punish the UK.

Recent press comment tells us that the EU itself has researched the legality of sending a leaving bill and realised there is no legal basis for any such payment. That is doubtless why they did not put the phrase leaving bill or equivalent into their statement of how they wish to handle the negotiations. They want the UK to settle the bills it owes, which the UK has always said it will. We are still paying our regular contributions even though we have told them we are leaving, and will doubtless do so up to departure.This implies Mr Macron will be unwilling to make a huge financial demand on the UK, knowing there is no legal back up to it.

Mr Macron has already stated his task – to bring greater unity to France by dealing with the economic hurts parts of the country feel. This will mean securing a good deal for French farmers and others to carry on selling produce into the UK market on favourable terms. IT is difficult to see how Mr Macron could keep faith with farmers if he insists on World Trade tariff levels on agricultural trade between our two countries.

His language of wishing to mellow the discourse and soothe tensions would also sit ill with stoking a wider trade war with the UK. People are affected by the emotions of the moment when they make decisions on what to buy. There are global alternatives to many well known French products, so it behoves the President to help woo the UK customers, just as the UK government wants to reassure and keep UK exports to France which we value.

I wish the new President every success in his stated aims after the election. I see no reason the UK cannot get on well with him in our mutual interest. I expect him to take a firm line in defence of French interests, but to see that it is in France’s interest to have a good deal with us. The French people will of course decide next month just how much power to give him ,when they decide on a Parliament to promote his ideas or to tame his reforms.

Promoted by Fraser Mc Farland on behalf of John Redwood, both at 30 Rose Street Wokingham RG40 1XU

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Health and social care

For many years and under many governments the UK has puzzled over the relationship between social care and the NHS. All governments would like a seamless transition from the one to the other for patients who need both. All have looked at whether some administrative or management reform would make all the difference. No-one so far has come up with a perfect solution.

Some now say the answer is to put social care under the control of the NHS. Others say the local NHS in each area needs to work more closely alongside the Council’s social service department. There are concerns that the boundaries do not work well, with some Councils not moving quickly enough to provide social care placing greater strains on hospitals with elderly patients.

It is tempting to think we could reorganise to remove any boundaries between different public bodies providing services. Then maybe the unified budgets would lead to more optimal outcomes for both patient and taxpayer. However, it is difficult to see how you can avoid a boundary. If you put social care into the NHS you just shift the boundary to the one with Council provided care homes and sheltered housing. If you transferred local NHS control to Councils you would find it much more difficult to get benefits from national NHS policies, purchasing power and hospital planning. There would be a bigger tension between national and local NHS, with all the money coming from the national level.

As someone who has thought a lot about this problem as a former government adviser and someone helping with past Manifestoes there is no easy answer. I conclude it is best to start from what we have, and build in incentives and requirements for good conduct by both the NHS and local social care.What we want is a wide range of provision, with choice and capacity available for each different and often difficult case.

Someone in social care needs access to a good GP and or to a hospital Consultant for a worrying condition. Admission to hospital when needed is not normally a problem. Decent supervision of an elderly person should enable better management of any medical condition without emergencies or alarms in many cases.

Discharging an elderly person from hospital requires appraisal of their needs and prompt and helpful action by social services, housing and other relevant departments. This is where local accountability and Councillor supervision should wish to shine.

Promoted by Fraser McFarland on behalf of John Redwood, both at 30 Rose Street Wokingham RG40 1XU

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Tests, the curriculum and learning

Yesterday I got involved in an important conversation on a doorstep about education.

I was told by a teacher that she felt strongly the present stretching curriculum backed up by regular testing was getting in the way of encouraging a love of learning in primary school children. She felt there was now too much emphasis on knowing facts and science, to the exclusion of wider education.

It is a difficult issue. I think you can make a case that too much emphasis on requiring mental recall of a fixed body of knowledge with testing to try to ensure pupils have memorised it can put some pupils off. It may inculcate an attitude of learning for the test and not bothering about anything that is not needed to pass the test. On the other hand if you go too far the other way and do not insist on mastery of the basics of number and words children can arrive at Secondary school ill equipped to carry out the more complex tasks there.

I remember at my own primary there was a strong emphasis on learning tables, spelling well, writing neatly, and being able to respond quickly to mental arithmetic challenges. There was a lot of rote learning and endless classroom tests to see if you had put in the work to memorise what was needed. The more creative work took place through projects, where you were encouraged to use your own initiative and time at home to flesh out a folder on the appointed topic. This mixture worked for some of us well.Today we now have the welcome development of smaller classes which should mean we can do better.

I would be interested in your thoughts on what is the right balance and the best approach. I agreed with the teacher that it is best if the system used does develop in a child a wish to know more, and a spirit of enquiry which will lead them to learn more through their own initiatives. If education is just a process of learning by rote and repeating for a test it will miss some of the most important features of personal development, but in the schools I have visited there is usually a balance in these matters which the national curriculum does not prevent. What are your thoughts.

Promoted by Fraser Mc Farland on behalf of John Redwood, both at 30 Rose Street Wokingham RG40 1XU

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The world recovery will be fine

There are many fears and alarms expressed about the state of various economies around the world. The curious thing is in recent years none of these has come true. The world economy has continued to grow at a modest pace, with contributions from all the advanced countries led by the US and UK growth rates. China too has kept a steady growth of over 6% going, with many critics claiming it is about to end. This year we may also get some turnround in Brazil and less of a drag from the oil and commodity based economies which suffered in recent past years from low oil and commodity prices.

The background with the Euro area continuing to create extra money and buying up sovereign bonds, Japan doing the same, and the persistence of ultra low interest rates outside the USA, is favourable for more growth. It is true there has been an uptick in US, UK and Euro area inflation this year. This owes much to the higher oil price, aided by some Chinese price rises on exported goods to reflect the higher input prices they are paying for energy and raw materials. This may well abate later this year, as oil and commodity prices have been weaker recently. Higher inflation has not so far impeded reasonable growth in consumer spending in all these affected areas.

Mr Trump’s new found ability to get a Healthcare reform through the House of Representatives means he may be able to get through some reflation as well. He still has to get the Healthcare Bill through the Senate, who may wish to amend it and cause difficulties. Getting some kind of healthcare reform through is an important first step prior to tax cuts which will be easier to achieve if healthcare reform delivers some expenditure savings. Serious tax cuts in the USA would power more growth, which would benefit the rest of us as well.

Promoted by Fraser McFarland on behalf of John Redwood, both at 30 Rose Street Wokingham RG40 1XU

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Fanciful figures

This week we saw a couple of sets of fanciful figures intrude on the debate. There was Labour’s 10,000 police at £30 a year salary, hastily adjusted to £8000 a year, still way below what we normally pay our officers. Then there was the FT’s take on the EU bill for the UK leaving the Union, at Euro 100bn.

The first sets of numbers were mistakes, and have been adjusted upwards as much Labour spending will need to be to make it realistic. £300 m a year is nearer the mark.

The second story that the UK owes up to Euro 100 bn is just silly. There are no legal obligations to pay beyond the sums we owe for our regular contributions over the next twenty two months before we leave. If they want a political deal on money, then of course they would need to knock off our share of the assets. I don’t see that is a sensible or attractive way to proceed for them. They should just accept the Treaty that allows for no special bill.

The UK should continue to be friendly, outward going and positive about it all. We should continue to stress the great deal we are proposing for our future relationship. Free access to our market for all their exporters. Guarantees for all their citizens living and working in the UK. Continued large UK contributions to the defence, security, research and culture of Europe.

Stable and strong leadership is needed by the UK, to be optimistic but to be firm in resisting silly proposals that have no basis in law or political reality.
The EU disobliging briefings sound as if they are coming from people who suddenly realise their negotiating strategy of pressurising a member state into seeing it their way is not going to work. The EU thought the UK would want to stay in the Single market Custom Union. They could then seek to charge us for that. It was always a silly assumption, as the UK clearly wants to make its own free trade agreements with the rest of the world which means leaving the Customs Union. The UK was also clear it wanted to stop paying the money. It is the Commission who are most worried about the loss of the UK’s contributions, as it’s their budgets and salaries that will suffer.

The way countries pay to trade with other reluctant countries is via tariffs. If the EU wants to put tariffs up against us, it can only do so to a limited extent under WTO rules.It would be a lot cheaper than the bills we are hearing about. In return we can impose more tariffs on them given the nature and volume of their exports to us. That is why I have always thought it likely in the end they will want tariff free trade. It is, of course, always possible they wish to self harm. However, it seems it is more the EU Commission that favours a tough approach as the harm is to the member states, not to the Commission itself. The member states are more likely to wake up to the harm it could do their export companies and especially their farmers and want a more sensible approach.

If the EU seriously thinks we need to give them money to be able to sell them goods presumably they would need to give us money to sell us goods. I can’t see that idea catching on.

Promoted by Fraser McFarland on behalf of John Redwood, both at 30 Rose Street Wokingham RG40 1XU

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The French debate

The debate between Le Pen and Macron was by all accounts fiery, personal and intense. There may have been less policy detail than some wanted, but the big divides over policy were nonetheless clear.
They both are running as anti establishment candidates who want change. That is more difficult for Mr Macron as he was until recently a Minister in the socialist government. Agreeing with his opponent that unemployment is too high and new economic measures are needed, he had to deal with why he had not done that as Economy Minister. He now wishes to liberalise the labour market, making it easier for companies to take on people. Madame Le Pen for her part wants to place barriers on the movement of people into the country and workforce, and to protect French trade and jobs by direct intervention. She was asked repeatedly for more detail of her measures and how they were supposed to work. They put the respective cases for a global and EU based approach versus a protectionist France first approach.
They differed strongly on the Euro and EU membership. Mr Macron is fully committed, and stressed the central importance of belonging to the Euro in his vision of the world. Mrs Le Pen argued that the Euro is the bankers’currency, not the currency of the people. She wants a French currency again.
Madam Le Pen attacked the powerful role of Germany in the EU and jibed that either way in this Presidential election France will be governed by a woman – herself or Mrs Merkel. Either when elected as President will need to construct a majority of representatives in the Parliament to help implement their programmes, which will make the Parliamentary elections most important after the choice of President.

Promoted by Fraser Mc Farland on behalf of John Redwood, both at 30 Rose Wokingham RG40 1XU

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The General Election.

The 2017 Parliament needs to see through the twin tasks of economic recovery and the successful negotiation of a new relationship with the EU.

Both these mighty tasks were started before. The task of economic rescue began in 2010.

We have seen through the first long part of the recovery, cutting the deficit and creating conditions for many new jobs to be generated. Today many more people are in work, and more have better paid jobs. We now need to raise our sights, to work smarter so more people can be better paid. We need to continue the good progress to getting more people into work. Once in work we need to help them train, improve, and gain promotion.  We also need to be encouraging of enterprise, making it easier for people to set up their own businesses, and to grow those businesses.

The task of leaving the EU whilst improving our relationship with Europe began last summer after the vote. We now need to bring people together to back a vision of what an independent UK looks like. It can be so much better. We want to be open to the world and a leader of freer world trade. We want to increase our collaborations on research, culture, investment and enterprise with the whole world, not turn our backs on European joint ventures. We do not wish to close our borders, but to welcome students, tourists, people of talent, executives of large global companies and those with the skills we need at home.

The overriding task is to get the law through to complete our exit from the EU, and to negotiate a friendly Agreement on our future trade and relations with the EU that helps them as well as us. The new Parliament will then need to move on to make those changes to our laws we need to make so that our newfound freedom leads to some improvement. The Conservatives have made clear we do not intend to remove any of the employment rights or environmental protections that have come from the EU, but to incorporate them in UK law. There they are safe, unless a party in the future with a majority wants to amend or change them having stated  so in a Manifesto.

We do wish to plan for changes to the current EU laws over fishing and farming. We think we need a fishing policy that is kinder to both our fish and our fishermen than the present policy. We want an agriculture policy that helps UK farmers produce more of our food, and supports landscapes where the farmer has costs to maintain them.

I am conscious that people who voted Remain were worried about possible economic damage. So far the UK economy has continued to grow, to generate more jobs, and to only suffer the same uptick in inflation that Germany and the USA have suffered, mainly owing to oil prices. I will work tirelessly in the new Parliament if elected to see through policies that put continued growth  and prosperity first.

Promoted by Fraser McFarland on behalf of John Redwood, both of 30 Rose Street Wokingham RG40 1XU

 

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Better facilities at Wokingham station?

I have received a follow up letter today from First Rail, who start the new South West train franchise in August. I held a meeting with them last month to discuss improvements for travellers using Wokingham Station.

They say they do wish to introduce a click and collect facility at the Station for people to pick up goods they have bought on line on their way home. This is subject to reaching commercial agreement on how to do it.

They also say they want to introduce automatic number plate recognition for car parking at the Station.  This would enable travellers  to register their Debit card for automatic payment. They will also allow on line purchasing of car park season tickets. The aim is to make it quicker and easier to park with these additional choices.

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Manufacturing PMI speeds up

The worriers about UK prospects often like to highlight the opinion p0lls of economic facts, the PMI figures giving an indication of how orders and confidence is trending in business.

Today’s figures show an acceleration in manufacturing orders and output prospects , with the Index surging to 57.4 where anything over 50 means growth. There is also a slowing of input price inflation. This is not surprising given the levelling off in  oil prices  and the fall in some other raw materials. China has also stopped raising her prices in recent week after a period of substantial rises in manufactured goods costs.

This is all positive for the second quarter output figures in due course.

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  • About John Redwood


    John Redwood won a free place at Kent College, Canterbury, He graduated from Magdalen College Oxford, has a DPhil and is a fellow of All Souls College. A businessman by background, he has been a director of NM Rothschild merchant bank and chairman of a quoted industrial PLC.

    Promoted by Fraser McFarland on behalf of John Redwood, both of 30 Rose Street Wokingham RG40 1XU

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