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Bank of England Inflation Report and Agents’ Summary of Business Conditions:  The Bank of England has released two summaries in the past week.  The latest inflation report shows, on the assumption of a gradual rise in interest rates from late 2015, that the UK economy show settle down to a period of growth at a rate of around 2½% per annum.  On the same basis, they expect inflation to fall further from its current level until the middle of 2015;  after this, it is expected to rise gently to reach the 2% target level by the end of 2016 (the Bank’s inflation forecast is always 2% in two years time, because this is what they are tasked with achieving!).

The latest report from the Bank’s local agents shows a slight easing of manufacturing output for the domestic market and a further slowing in export growth;  note that this is a slowing of growth - the trend is still upward.  In particular they note a slowing of demand for intermediate goods from export supply chains.

The Agents’ reports on investment intentions pointed to a further slowing in the expected rate of growth in capital spending among manufacturers which was attributed to completion of earlier projects and to a reduction in confidence about growth prospects in export markets.  However, again it is worth noting that this is slower growth - the trend remains positive.  Similarly, capacity utilisation in the manufacturing sector eased slightly, but remains at around “normal” levels.

You can download these two reports from the following web-links or request them from MTA.  The Inflation Report is available at and the Bank’s Agents’ Report at

UK Annual Business Survey:  This overview of the UK economy from the Office for National Statistics (ONS) by sector gives us some structural information about the various sectors with value data measuring gross value added (GVA) as well as turnover.  We discover, for example that the largest sector within manufacturing is food products with GVA of around £20 billion in 2013, but the next 4 largest sectors are metal products (£14.0 bil), automotive (£13.6 bil), machinery (£13.0 bil) and other transport equipment (£12.0 bil) - these are the 4 sectors which are the principle destinations for manufacturing technology equipment.  This amounts to 33% of the total for manufacturing and is 32% of total turnover for those industries.

It also reveals that total capital expenditure of the manufacturing sector in 2013 was £14.5 billion;  of this, the 4 key industries accounted for £4.6 billion or 32%.  Average total employment during 2013 in manufacturing was 2.48 million people;  for our 4 key industries, the total was 774,000 or 31%.

You can download the ONS Statistical Bulletin from their web-site at or request it from MTA.

R&D Expenditure 2013:  This week has seen the release of data on spending on R&D in both the UK and across Europe.  The figures from the ONS show that total spending on R&D in UK businesses grew by 8% to £18.4 billion (at current prices).  Expenditure by foreign owned businesses accounted for 54% of total expenditure.

By far the largest sector for R&D is pharmaceuticals which accounted for 22% of total spending, but this is followed by the automotive industry at 11%;  aerospace accounted for 9% of the total and the other two key industries together totalled 6%, taking the combined total to just over ¼ of total R&D expenditure.  The ONS report contains a wealth of other breakdowns for those with an interest in this analysis and you can download Statistical Bulletin from their web-site at or request it from MTA

In the European Union, total R&D expenditure accounted for just over 2% of GDP and two-thirds of this is performed in the business sector (business R&D spending in the UK was 1.1% of GDP) - the remainder is split between higher education, government and private non-profit companies.  Within the EU, the highest R&D intensity is in the Nordic countries of Finland, Sweden and Denmark which are the only countries with a rate above 3%;  next highest intensities are in Germany (2.9%) and Austria (2.8%).  You can download the Eurostat News Release on the subject from their web-site at or request it from MTA.