The leader of Bristol City Council has warned businesses need to use the city’s international links to attract more investment and jobs.

Bristol is twinned with a number of major cities around the world, and Councillor Barbara Janke highlighted the likes of Oporto in Portugal and German city Hannover as those with special links with Bristol’s green agenda.

“Across Britain’s major cities, our twinning association is one of few to be wholly funded by the local council, yet some of the others are much more productive,” said Cllr Janke.

“That’s why we’re proposing to redirect our twinning operation to develop economic links and partnerships and build up a global catalyst fund to attract funds from other sources.

“For many years Bristol’s links and the strength of its partnership working lagged behind that of other cities. There are enormous opportunities for Bristol to gain investment and jobs through international links, but we need to approach it in   a different way.”

Cllr Janke added Bristol needed to unlock the potential of these links and through the European Union and other contacts, such as the Covenant of Mayors.

Bristol Business News

Proposals that could boost investment in the local economy are under review following talks between the West of England Local Enterprise Partnership and bankers from Barclays, Lloyds TSB, Santander UK and HSBC.

LEP chair Colin Skellett said: “Small and medium-sized businesses across our region are united in their call for more to be done to ease access to finance to help them grow. The meeting with the banks was a good opportunity to explore areas where we have common goals, particularly in our discussions with central Government ahead of the Budget to influence local and national policies on economic development.”

The talks agenda focussed on:

• Lobbying Government in advance of the March 21 Budget on advancing investment in the local economy and SMEs. Access to finance is cited as local businesses’ greatest barriers to growth;
• Measures to tackle high levels of youth unemployment, looking at the Backing Young Bristol campaign and ways the banking sector can support it and other initiatives;
• Financial mechanisms available to cities for investment in infrastructure and skills, looking at innovative models of investment such as tax increment financing or municipal bonds;
• Bristol’s bid for the Green Investment Bank and the support the banks can play to reinforce Bristol’s strong case.

LEP vice chair and city council leader Barbara Janke added: “The Centre for Cities latest report again highlights the role successful cities like Bristol can play in driving growth and creating jobs. Indeed Bristol now has the highest employment rate of any major city and we must build on this.

“We have been clear for a long time that we want local authorities to be more financially independent of central government. The banks were receptive to our innovative ideas for how we could support investment in the local economy, such as tax increment financing or municipal bonds.”

Economic output in the UK shrank by 0.2% in the last quarter of 2011, according to new figures from the Office for National Statistics (ONS), a slowdown from the 0.6% growth recorded in the previous quarter.

The contraction was slightly worse than the 0.1% that economists had expected and if it is followed by another period of negative growth in the first quarter of 2012, the UK economy will officially be back in recession.

It is the first time the UK’s gross domestic product (GDP) has fallen since the final quarter of 2010 when the Arctic weather was blamed for a 0.5% drop. Over the course of 2011 as a whole, GDP increased by just 0.9%, much slower than the 2.1% growth in 2010.

The contraction was driven by a 0.9% fall in manufacturing, a 4.1% drop in electricity and gas production as the warm weather caused people to turn down heating, and a 0.5% fall in construction sector.

The Chancellor, George Osborne, said the figures were disappointing but not a surprise.

“They are not entirely unexpected because of what’s happening in the world and what’s happening in the eurozone crisis,” he told BBC News.

“The truth is that dealing with those problems is made more difficult by the situation in the eurozone.”

Bristol analysts from BDO said earlier this month a contraction was expected and that it was now “crunch time” for the UK economy.

They called for the Bank of England to consider a further round of quantitative easing, and for banks to continue to step up their lending to UK businesses.

Jim Brown, Partner at BDO LLP in Bristol, said: “There are areas for cautious optimism in the year ahead but it is apparent that the UK economy has reached a crunch point. The Government must respond decisively if the UK is to avoid a period of prolonged contraction.

“We urge the Bank of England to consider a further round of quantitative easing, and we encourage the banks to continue to step up their lending to UK businesses.

“We also want to see the Government introducing measures in 2012 that encourage private sector investment in infrastructure. And we remain of the view that the Government’s attempts to rein in current spending have given it the credibility to be bolder in borrowing more to finance infrastructure spending.”

Bristol Business News

Inflation fell sharply last month as lower fuel prices and hefty pre-Christmas discounting on the high street brought some economic relief.

The drop – to 4.2% from 4.8% in November – is the biggest fall since April 2009 and supports Bank of England forecasts that inflation will tumble this year as a result of the faltering economic recovery. Inflation hit a three-year peak last September when it reached 5.2%.

While it has remained stubbornly above the Bank’s 2% target over the past couple of years, economists believe by the end of this year it will be below that benchmark – bringing relief to consumers and businesses.

The fierce downward pressure on workers’ buying power over the past twelve months, from weak wage growth and rocketing prices, was one of the key reasons the economy was far weaker than many forecasters predicted in 2011.

A clear sign that inflation has started declining could open the way for the Bank of England to signal a renewed expansion of its £275bn quantitative easing programme next month, as it publishes its quarterly forecasts.

The Office for National Statistics, which published the inflation figures on Tuesday, said that retail price inflation, which also includes mortgage costs, also fell sharply, from 5.2% in November, to 4.8% last month.

Bristol Business News

Phil Smith

Five priority areas to boost the West of England’s economy in 2012 have been highlighted by Business West, the area’s lobbying and advice group.

It has pledged to lobby hard for businesses in the area – with its priorities being promoting exports, boosting transport, tackling youth unemployment, reaping the benefits of local procurement opportunities, and supporting the Local Enterprise Partnership (LEP).

Business West, which also runs the area’s chambers of commerce, says many of its members are positive about the new year despite the tough challenges of 2011 and the many negative economic forecasts.

Business West managing director Phil Smith said: “Welcoming in a new year is always a time for great optimism where we put behind us the trials and tribulations of the past year and move forward in a more positive state of mind.

“For business this is a real challenge after the year we have just had which truly did provide us with a bit of a rollercoaster ride.

“In 2011 the business community had a tough time, with economic recession, high unemployment, high inflation, national strike action and falling sales. And all this against a backdrop of a government talking of putting private sector jobs growth at the top of its agenda and protesting how critical business is to our local and national economy.

“It has been undoubtedly tough and in some quarters there is still a perceptible fear that the financial crisis is entering a new stage with concerns that economic growth will continue to prove elusive in 2012.

“But blanket negativity will get us nowhere, particularly as many of our Business West members tell us they are quietly confident about continuing success. Business must continue to stand up for itself and reinforce its central role in both wealth creation and job creation. Business West will certainly carry on lobbying hard for business.”

Priorities in 2012 will include:

• Promoting export opportunities and helping local businesses make the most of what’s on offer
• Ensuring local transport schemes actually happen and get through the planning process – critical now funding has been secured
• Working with business to provide employment opportunities for young people by supporting national schemes and new innovative local projects
• Ensuring West businesses see the benefits of local procurement opportunities through major national projects such as the Nuclear Power programme (Oldbury and Hinkley)
• Supporting and challenging the LEP to deliver on removing business barriers to growth

Mr Smith added: “Each year we draw up a list of priorities based on members’ views and concerns. In 2011 we saw some excellent progress on some of these.”

Successes this year included:

• More than £150m of Government funding secured for major local transport schemes across the West of England
• Government approval and support for the electrification of the Great Western mainline between Bristol and London
• Important amendments to the Localism Act to include business neighbourhoods and business engagement
• Improving relations between the banking community and local businesses

“Gearing up for a positive year, Business West is positioning our local chambers as a local access point for business support and services,” added Mr Smith. Business West supplies Chamber of Commerce services to nearly 2,000 members across Bristol, Bath & North East Somerset and Gloucestershire.

“With the demise of local Business Links we will be providing business solutions at a time when businesses need all the help they can get. 2012 needs to be the year for business where we all recognise that ‘business is good for Britain’ and work together to promote and support business growth.”

The UK economy ground to a halt in the second quarter of the year, revised figures have revealed, but bounced back between July and September with stronger growth than previously estimated.

Gross domestic product (GDP) grew at 0.6% in the third quarter, revised up from a previous estimate of 0.5%, the Office for National Statistics (ONS) said, while growth between April and June was slashed to zero from 0.1%.

The third quarter was boosted by better than estimated growth in agriculture, construction and services, while the second quarter was hit by weaker than estimated figures in the services sector.

However, economists forecast a sharp slowdown at the end of this year and early in 2012.

Philip Shaw from Investec told the Daily Telegraph: “The GDP figures don’t change the big picture. One could argue that output fell very slightly over Q2. But what matters is how soft the economy is looking ahead, and the duration of any downturn.

“Our expectation is that the UK is about to undergo a short recession. We think from the first quarter on, but it is possible that contraction actually began in Q4 this year. It is pretty clear that 2012 is going to be a challenging year.”

UK consumer price inflation eased in November as expected, helped by lower food, petrol, clothing and furniture prices, the Office for National Statistics said.

The ONS said on Tuesday that consumer prices rose 0.2% last month to 4.8%, down from 5% in October.

The cost of food and non-alcoholic drinks rose at its lowest rate since July 2010 after supermarkets launched aggressive price wars and a strong harvest saw the price of fresh vegetables and bread fall.

The ONS said that prices of electricity, gas and other fuels rose at an annual 20.9%, the fastest pace since February 2009.

The retail price inflation (RPI) gauge, which includes more housing costs and is the benchmark for many wage deals, fell to 5.2%. This compared with a forecast annual rise of 5.1pc.

The central bank expects weak growth will push inflation well below its 2% target over the next 18 months.

Vicky Redwood, chief UK economist at Capital Economics, told the Press Association: “November’s UK inflation figures provide further hope that inflation has now passed its peak and could soon fall pretty sharply.”

Bristol Business News

Confidence levels among firms in Bristol and the West are tumbling as the outlook for 2012 deteriorates further, two gloomy surveys show today.

Manufacturers, who have generally experienced good trading conditions this year, expect output and orders to decline next year while overall business confidence is falling on fears of a double-dip recession.

The downbeat picture emerges from surveys carried out in the region by EEF, the manufacturers’ organisation, in associated with accountants BDO, and the ICAEW (Institute of Chartered Accountants in England and Wales) with accountants Grant Thornton. Both accountancy firms have major offices in Bristol.

The surveys urged the government to take urgent action to prevent the economy sliding back into recession, with extra help for struggling small firms.

The EEF/BDO report shows that output and orders for the region’s manufacturers continued to show positive trends (up 8% and 4%) over the past three months, although the rate of growth for output slowed.

And while employment levels improved over the previous quarter (up 25%), firms are predicting this will stall over the next three months. Businesses in the motor vehicle and mechanical equipment segments of the industry experienced a strong quarter although basic metal, rubber and plastics manufacturers and electronics firms reported negative output and orders balances.

Looking ahead, the aerospace industry is expecting strong demand into next year.

However, looking forward prospects are gloomy and the EEF has downgraded its forecast for UK manufacturing growth for 2012 from 2.2% to just 0.9%.

EEF South West region director Paul Knight said: “Manufacturing has been a key pillar in the recovery so far and it looks like the sector will still end the year on the up with positive output and orders responses posted over the past quarter.  However, short-term confidence has all but fallen away.

“The signs of caution that had been emerging through the second half of this year have clearly become more entrenched as global growth concerns have escalated.  There are not only question marks over wider manufacturing prospects at the beginning of 2012, but also the exports and investment needed to underpin sustainable growth.”

BDO’s manufacturing partner at its Bristol office Jim Brown added: “Although exports have maintained a relatively strong performance in the quarter the continuing problems within Europe, which is by far our biggest export market, are clearly having an effect and generally increasing a feeling of nervousness and lack of confidence.

“However, despite this gloom manufacturing looks set to perform well in relation to other parts of the UK economy in 2012 and we would strongly encourage the government to increase the momentum of support for the sector in order to help rebalance and boost the economy. It seems clear that manufacturing has to be at the centre of the government’s future growth plans.”

It is a similar picture at the ICAEW/Grant Thornton UK Business Confidence Monitor (BCM), which shows confidence among South West firms falling to its lowest level for two-and-a-half years, reaching a new low of minus 9.4 from a score of plus 4.4 last quarter.

However, this is against a backdrop over the past 12 months of continued growth in turnover, gross profits and sales volumes while capital investment growth has also been on an upward trajectory. There is further positive news with businesses reporting the fastest growth in headcount since the third quarter of 2008, but increasing numbers also say they are concerned about the burden of red tape and regulatory requirements.

ICAEW regional director Jon Blake said: “In the first nine months of the year, businesses have played their part in supporting economic growth. Many are proud of their success against a backdrop of a very slow and protracted recovery. Yet they are becoming increasingly worried about the immediate outlook and the risk of a double dip recession. The combination of credit easing and other specific measures could be a lifeline to businesses, particularly SMEs (small to medium-sized enterprises) who are currently struggling. Government needs to rapidly change the mood music that the business community clearly feels.”

Grant Thornton senior practice leader in Bristol Nigel Morrison added: “This survey reveals what we have experienced for over 18 months now; a general lack of confidence which has a debilitating effect on activity levels.

“There are many businesses in the South West who are doing very well and taking advantage of niche positions or favourable export markets, but they are in the minority. It remains hard work for the vast majority and 2012 is likely to remain very challenging.

“The measures to stimulate growth which were announced in the Autumn Statement are very welcome but may not impact quickly enough to prevent the UK technically slipping back into recession by April 2012, when the Q1 GDP statistics are released.”

The key findings of the latest South West BCM are:

Growth remains below pre-recession levels

Businesses in the South West have seen a generally upward trend for growth since Q3 2010. Turnover has grown by 5.5% on average over the last 12 months, while gross profits and sales volumes have grown by 3.0% and 3.5% respectively. However, while relatively robust compared with the recent past, annual growth in these metrics remains below pre-recession levels, suggesting the economy in the region continues to suffer from the aftershocks of the financial crisis.

Reported capital investment growth in the region has also been on an upward trend recently, growing over the 12 months to Q4 2011 by 4% compared to a decline of 0.5% over the year to Q4 2010. However, in line with falling confidence, expectations for future capital investment growth are now subdued. Firms anticipate only 1.1% growth over the coming year.

South West labour market remains fragile

This quarter, businesses in the South West report staff headcount as being 2.3% higher than 12 months ago, the fastest reported growth since Q3 2008. However, firms expect more modest growth in employment over the next year, of 1%. Underlying fragility in the South West labour market is also indicated by the fact that just 7.0 per cent of businesses report staff turnover to be a greater challenge than 12 months ago. This proportion has been on a downward trend since Q3 2010 when it stood at 17%.

Firms in the region also report total salaries just 1.3% higher now than 12 months ago. Before the recession, they typically planned on around 3% annual growth in total salaries. Weak salary growth is projected to continue in 2012, with businesses in the South West expecting total salaries to grow by just 1.2% over the next 12 months. With consumer price (CPI) inflation of 5% in October, the spending power of employees in the region will be severely eroded.

Regulation remains an issue

This quarter, half (50%) of businesses in the South West report regulatory requirements to be a greater challenge than 12 months ago, up from 42% in Q3 2011 and 37 per cent in the same quarter a year ago. Overall, this suggests that a significant number of businesses in the region are still to be convinced about government measures to cut red tape.

However, despite concerns about excessive regulation, just 2% of firms in the South West report government support for business to be a greater challenge than 12 months ago, down from 12% in Q4 2010.

Here is a round-up of what Bristol business leaders and organisations thought of Chancellor George Osborne’s Autumn Statement yesterday:

Phil Smith, managing director of Business West welcomed much of the content of the Autumn statement and believes it will have a positive impact on business. He said: “However, we do share general business concerns about the ongoing challenge of our current economic situation. The revised forecast tells a bleak story for business. Rapid implementation of the new schemes proposed by the government around credit easing and infrastructure investment is now needed so together we can make a difference.

“Our members will particularly welcome the Chancellor’s renewed commitments to reform employment law and simplify the planning system. Businesses will support the aim of credit easing, but will be watching carefully to ensure that companies can access the finance they need to grow.”

Tim Davis, Head of DTZ’s Bristol office, said: “News that capital allowances will be made available in six of England’s Enterprise Zones, is positive news but it is disappointing to see that Bristol’s Zone will not benefit.

“The announcement that the Bus Rapid Transit scheme from Aston Vale to Temple Meads and the South Bristol Link will be going ahead are welcome improvements to the city’s transport infrastructure. The combined effect of these two initiatives in Bristol are a major step forward in improving transport links to south and south west Bristol and will hopefully lead to increased employment generating activity in this area of the city.”

Denis Woulfe, Practice Senior Partner at Deloitte in Bristol, said he was hopeful for the economy despite the global outlook. “Within the Autumn Statement were a number of announcements which will no doubt be welcomed by the South West’s businesses. For those companies involved in fuel intensive industries, such as agriculture and logistics, the scrapping of the planned 3p fuel duty rise in January and scaling back of a further rise in August 2012 will be a welcome relief.

“A credit easing programme for small and medium-sized firms also sounds encouraging, although the impact of what this will mean for individual firms will become clearer once the full detail is unveiled. A £1 billion business finance partnership to help secure funding for medium-sized firms is another measure aimed at stimulating growth in what is the engine room of our economy.

“As we approach 2012, the risk of the UK’s slow and hesitant recovery dipping into a second recession remains. However, it is to be hoped that some of the measures announced aimed at stimulating growth will prevent a double dip.”

The CBI gave an immediate positive reaction to the Autumn Statement with its director-general John Cridland saying it “works with the realities of today and provides an imaginative framework for UK businesses as it strives to secure growth and jobs”.

The CBI had called for a Plan A plus and Mr Cridland said this was one in all but name.

“The downgraded forecasts and outlook were no surprise, but the Eurozone crisis is still hanging over us. The Government’s dogged commitment to budget deficit reduction remains the only way to maintain the UK’s triple A credit rating and low interest rates on international money markets.”

Small firms across Bristol and the South West are being encouraged to show they’ve got what it takes to “export for growth” by entering a new competition run by UK Trade & Investment (UKTI) South West.

The new “Exporting for Growth” competition aims to encourage more small businesses to take their products and services to overseas markets by offering a comprehensive package of support to the company with the best export idea.

The winner will receive UKTI support worth £5,000 and three grants for overseas travel to their target markets, plus expert business knowledge and insight from sponsors PwC and HSBC Bank Plc.

Small and medium sized enterprises (SMEs) in the South West have until Friday, January 13, 2012 to submit their entry. Shortlisted companies will then be invited to present their big export idea to a live audience of business leaders and a judging panel who will then select the winning idea for the region.

Russell Jones, UKTI Director for the South West, said: “There is strong evidence that companies that export improve their financial performance, are more productive and are more likely to stay in business.

“There is demand all around the world for products and services from the South West but too many of our smaller firms are missing out on these opportunities. That’s where this competition, and the fantastic prize on offer, will help.

“If you’re a small company with a big export idea, we’re keen to hear from you, particularly if you’re new to exporting or relatively inexperienced. Just tell us – in 200 words – what your idea is, why it’s workable, and why now is the best time to take it to market.”

There will also be prizes for the second and third placed ideas, and all shortlisted companies will have access to professional mentoring support to develop their pitch presentation as well as time with a UKTI International Trade Adviser.

To find out more about the Export for Growth Prize and download an entry form, visit www.ukti.gov.uk/exportingforgrowthprize