Recently in David Bailey Category
The recent survey by Ernst & Young of the UK's attractiveness to foreign investment showed a 2.7% rise in foreign-backed UK projects (the report can be read here).
This came in the face of an overall decline in investment across Europe. Measures such as the 'patent box', offering a lower tax rate on some intellectual property, seem to have helped to improve the UK's overall attractiveness.
London (which has kept its development agency) remained the regional investment powerhouse in the UK, attracting 45% of the UK's total projects. This was equivalent in scale to the fourth largest European country. The devolved administrations of Scotland, Wales and Northern Ireland also saw strong increases.
News that Manganese Bronze has postponed restarting full production of its TX4 taxi at its Coventry plant illustrates the difficulty of starting up again after a long production break. Assembly of the iconic cab was suspended last year after IT problems created an accounting black hole and defects in steering boxes forced it to recall 400 cabs, with the firm subsequently going into administration.
Manganese Bronze was eventually bought out of administration by the Chinese firm Geely last February and the firm had previously said it would restart production by June. But that has now been put back to the end of the summer.
News that a consortium of three investors was looking at buying Sever Trent sent the firm's shares up by 14% this week. The potential investors include a Canadian infrastructure firm Borealis (ultimately owned by the Ottawa Local Government Retirement Scheme), the Kuwait Investment Office (the UK branch of Kuwait's Sovereign Wealth Fund), and the Universities Superannuation Scheme here in the UK.
Borealis already owns stakes in High Speed 1, Scotia Gas and Associated British Ports, while the Kuwait Investment Office has investments of over £15bn in 100 UK listed companies, along with a stake in Gatwick airport.
Today Severn Trent rejected the initial approach, stating that "a conditional proposal was tabled by the consortium at only a modest premium to the share price before the announcement of May 14. The board of Severn Trent has reviewed the proposal with its advisers and concluded that it completely fails to recognise the existing and potential value of Severn Trent."
After Regional Development Agencies were scrapped by the Coalition government in 2010, smaller scale Local Enterprise Partnerships (LEPs) were set up - effectively as partnerships between local authorities and business.
But those LEPs are now suffering from a lack of confidence, confusion and short-termism, the all-party House of Commons Business, Innovation and Skills Select Committee warned last week in a hard hitting report which is well worth a read (you can read it here).
In particular, the funding of LEPs was sharply criticised in the Committee's report, which argues that this undermines efforts to revive the economy.
The Chancellor George Osborne no doubt breathed a huge sigh of relief today when his earlier claim that 'the deficit is coming down' held up. But it was eye watering close.
Figures from the Office for National Statistics (see here) show government borrowing falling from £120.9 billion in 2011-12 to £86.2 billion in 2012-13.
But the latter 2012-13 figure was lowered by £28 billion by the Royal Mail pension transfer, and another £6.4 billion through the cash transferred to the Treasury from the Bank of England's Asset Purchase Facility.
Take out these two artificial factors and borrowing for 2012-13 came in at £120.6 billion. OK, that is just lower than the 2011-12 figure, but only just, at just £300 million less, or 0.3% less.
It's been a dismal few weeks for the Chancellor George Osborne, with another ratings agency downgrading the UK's AAA credit rating (despite the Chancellor having made it the centrepiece of his economic policy), the International Monetary Fund urging him to rethink his austerity measures, and figures showing unemployment rising.
But what was most noticeable for me was how the Chancellor's budget measures to stimulate the housing market were already seen to be unravelling, reminiscent of the caravan-pasty tax 'omnishambles' of last year.
In his recent budget, Chancellor George Osborne unveiled yet another effort to boost infrastructure spending with a planned £3bn extra investment, but only from 2015-16, and with little detail on where that investment would actually go.
The extra money for infrastructure investment would come out of additional current spending cuts. The extra spending was welcome but fell far short of what was needed, and indeed what the Business, Innovation and Skills Secretary Vince Cable had called for before the budget.
There was no extra borrowing at historically low interest rates (as Vince Cable called for) to pay for extra capital spending to kick-start recovery. Cable, remember, had written that the question was whether "should borrow more, at current very low interest rates, in order to finance more capital spending: building of schools and colleges; small road and rail projects; more prudential borrowing by councils for house building. This last is crucial to reviving an area which led economic recovery in the 1930s but is now severely depressed".
This blog develops my earlier reaction to George Osborne's recent Budget.
Admittedly it's a gross over-simplification to compare setting economic policy to making a pizza. But bear with me as it's a useful analogy. In essence, three levels can be identified in both. A pizza is often completed by a scattering of cheese (political rhetoric), which goes on top of the chosen topping (a mix of policies), which in turn is layered onto the base (the underpinning economic framework).
On visiting a restaurant, we often take time to choose our preferred topping. However, as my Italian in-laws often tell me, in practice it's not the topping that makes for a really top-notch pizza, but the quality of the cooking of its base.
It was investor Nelson Peltz who via his investment firm Trian Partners agitated for the splitting up of what was then Cadbury Schweppes back in 2007 which subsequently led to a demerger and Cadbury becoming a much smaller player.
The demerged Cadbury was subsequently 'in play' as a takeover target and was gobbled up a few years later by Kraft. Of course, what was good for Nelson and his chums in extracting value didn't necessarily equate with either long term business success or wider economic benefits.
He's at it again, it seems. Peltz has reportedly taken big stakes in PepsiCo and Mondelez (the owner of Cadbury since the Kraft split ), supposedly with the goal of putting them together or - more likely I feel - splitting off part of PepsiCo to merge with Mondelez. (Of course it could just be a passive investment and everyone could be getting far too excited - I hope so).
Nissan this week officially launched production at its Sunderland plant of an updated version of its Leaf model, having decided to shift some production out of Japan to reduce costs.
Output has already started in Tennessee for the American market and as there, a battery plant has been built next door to the Sunderland assembly plant to produce the batteries going into the car. Leaf production for other markets continues at Oppama in Japan but the firm is also actively looking at production in China under a local brand.
This all links to what Renault-Nissan CEO Carlos Ghosn terms "localisation", i.e. shifting production nearer to the end market (on my earlier blogs on re-localisation, see here). This is especially important given exchange rate shifts, as Ghosn highlighted this week.