There was positive news for the economy this week as it was announced that GDP has grown by 0.8% in the past quarter. The news was welcomed by Chancellor George Osborne, who described the GDP figures as a “major milestone”, but he warned that there was more to do.
The CBI says that the latest figures show that the economy is continuing to make a recovery that is “built on solid foundations.” The CBI has stated that it is hopeful that the recovery will keep “motoring along” at the same steady pace throughout the rest of 2014 and into 2015.
The latest survey from the CBI showed that the UK manufacturing industry is continuing to make a steady recovery. Survey respondents from the manufacturing industry and retail and service sectors have all recorded strong growth in the last quarter.
However, the survey is especially good news for the manufacturing industry as figures for the past quarter showed that manufacturing experienced its strongest growth for five months.
Katja Hall, CBI Deputy Director-General, said:
“There are signals that the recovery may now be on a more sustainable footing, with growth becoming more broad-based as business investment in particular grows strongly.
“But there are still long-standing issues around boosting exports, while disappointing productivity could impact wages and household spending. Firms will also be carefully monitoring the situation in Ukraine and parts of the Middle East, where political volatility is likely to make the global economic environment that bit tougher.”
Order book growth has also improved significantly, showing their strongest growth for nearly 20 years. Moreover, manufacturing firms expect there to be an increase in orders in the next quarter.
Export orders haven’t experienced the same recovery as yet; it is predicted that export orders will recover. However, a stronger growth in domestic orders is continuing to help fuel the manufacturing industry.
Key findings from the latest survey shows that manufacturers have reported a 41% increase in orders; 42% of manufactures expect their orders to increase in the coming months.
Katja Hall, CBI Deputy Director-General said that the recovery in the manufacturing industry was “keeping a good pace”; however, the Deputy Director General urged caution stating that there are “still risks to the economy”.
Businesses are to get £10 million in funding in order to help them save money on the costs of energy, the government has announced. The funding will also be extended to industry and other organisations.
The government says the money will help to improve energy efficiency and reduce energy demand. On the same day, it was also announced that the government would be making it easier for firms to invest in energy infrastructure.
Speaking at the CBI’s Energy Conference, Energy and Climate Change Secretary Ed Davey said that £45 billion had been invested into the energy sector over the last three years, with more than £8 billion being invested into renewable forms of power generation in 2013.
The government says that funding helps to tackle the “legacy” of underinvestment into the power generation industry in the UK, which could have left the United Kingdom without power, had it continued.
Speaking at the Conference, Ed Davey said:
“Our plan is powering growth and jobs in the UK economy. We are building a secure, sustainable energy system for the future, dealing with an historic legacy of underinvestment and neglect that threatened to undermine the whole economy.
“The funds we invest now in keeping the lights on could, in the future, be available to support cheaper projects that deliver lasting reductions in peak electricity demand.
“…and by stripping away barriers to investment in our energy market, we’ll make attracting capital investment cheaper and easier – meaning real benefits for the British economy and British consumers.”
As part of the Electricity Demand Reduction, companies will compete for a share of £10 million; a total of £20 million has been made available for the full pilot. In order to be able to compete, businesses will need to have a project that will help to reduce the cost of power generation.
Companies can begin bidding for a share of the money from July 29, 2014. To qualify, the projects must save businesses money on their energy bills, as well as offer lower carbon emissions and reduce demand on the National Grid. The government says that increasing energy efficiency could create less of a need for new power stations.
Numerous organisations, including hospitals, supermarkets and airports have already announced that they will be competing for a share of the money. Moreover, the government wants to hear from anyone that offers projects that could save at least 100 kilowatts during peak periods such as winter time.
Reforms to the energy market, which are aimed at finding greener sources of power generation, have led to a £200 million boost for renewable energy companies. The government says that its reforms to the energy market will mean lower emissions from the power sector and that it would help to lower electricity costs for energy users.
Starting in October, companies from the renewable energies sector will be invited to bid for a share of £200 million; the funding is part of the Contracts for Difference. The competing companies have been invited to bid for a share of funding as the government wants to ensure that newer, greener forms of power generation will be available at the lowest possible cost for energy customers.
The government also announced that there will be another round of funding for the scheme from 2015; a further £150 million will be made available. The new funding is in addition to money already allocated to renewable energy and the government says that the announcement will help to fuel the economy and create new jobs.
Commenting in a press release, Energy and Climate Change Secretary Ed Davey, said:
“Our plan is powering growth and jobs as we build clean, secure electricity infrastructure for the future. By radically reforming the electricity markets, we’re making sure that decarbonising the power sector will come at the lowest possible cost to consumers.
“Average annual investment in renewables has doubled since 2010 - with a record breaking £8billion worth in 2013.
“These projects will create green jobs and green growth, reduce our reliance on foreign-controlled volatile energy markets and make sure bill payers get the best possible deal.”
Mr Davey went on to explain that the investment in green energy would help to create a low carbon electricity system that would be the “powerhouse of the British economy”. It is estimated that the renewable energy investment scheme could help to create a quarter of a million jobs by 2020.
It is hoped that the new system will encourage more competition in the power generation industry and encourage more private sector investment into low carbon power generation.
The budget will be divided into three separate groups: onshore wind and solar, offshore wind, and biomass conversions. Each group will have to compete against each other for a share of the money, thus driving down the costs of energy production for energy customers.