Download UK - March 2015 - Bombay Chamber of Commerce and Industry

High Commission of India
London
(Economic & Commerce Wing)
Economic & Commercial Report on the United Kingdom
March 2015
Overview of UK’sEconomy
Gross Domestic Product in volume terms was estimated to have increased by 0.6% between
Quarter 3 (July toSept) 2014 and Quarter 4 (Oct to Dec) 2014, revised up 0.1 percentage points
from the previousestimate of GDP published in February 2015.GDP was estimated to have
increased by 2.8% in 2014, compared with 2013, revised up 0.2percentage points from the
previously published estimate.
The Consumer Prices Index (CPI) was unchanged in the year to February 2015, that is, a 12month rate of 0.0%, down from 0.3% in January.The main contributions to the slowdown in
the rate came from price movements for a range ofrecreational goods (particularly data
processing equipment, books and games, toys & hobbies),food and furniture & furnishings.
The unemployment rate was 5.7%, lower than for August to October 2014 (6.0%) and for a
year earlier (7.2%). Theeconomically active population is those in work plus those seeking and
available to work.There were 30.94 million people in work, 143,000 more than for August to
October 2014 and617,000 more than for a year earlier.
The deficit on trade in goods and services was estimated to have been£0.6 billion in January
2015, compared with £2.1 billion in December 2014. This reflects a deficitof £8.4 billion on
goods, partially offset by an estimated surplus of £7.8 billion on services.The sharp narrowing
of the deficit reflects a fall of £2.5 billion in imports. Almost half of this fall(£1.2 billion) is
attributed to oil imports, where trade remains volatile due to the well publicisedoil price
movements. The fall in oil imports is largely from countries outside the European Union(EU).
In addition there were falls in all of the main commodities imported from the EU.
The Bank of England kept interest rates at 0.5% and maintained the stock of purchased
assets financed by the issuance of central bank reserves at £375 billion.
Mergers and Acquisitions Involving UK Companies in Q4 2014
2014 saw total domestic and cross border mergers and acquisitions involving UK companies
fall to the lowest numbers recorded since 1987, when ONS first published overall total M&A
figures. In both Q3 and Q4 2014 total domestic and cross border mergers and acquisitions
continued to report lower levels of activity than seen before the 2008-09 economic downturn.
In 2014 20 completed acquisitions of UK companies made by foreign companies (inward
M&A) were reported. This is the lowest quarterly figure reported since Q1 2013 when 19
acquisitions were recorded. During 2014 there were 105 acquisitions of foreign companies
made by UK companies (outward M&A) compared with 58 recorded in 2013, a year-on-year
increase of 81%.
UK Budget 2015 – Highlights
Rt Hon George Osborne, UK Chancellor of the Exchequer presented his Budget to the
Parliament on March 18, 2015. Following are the highlights:
The UK had the fastest growth in the G7 in 2014: The UK economy had the fastest annual
growth among G7 economies in 2014, and the strongest annual growth since 2007. At the end
of 2014, employment had reached its highest ever level, unemployment has been falling in
every region across the UK, and inflation is at a record low.But risks still remain and there is
still more to do to support businesses and boost productivity.
Debt will be falling as a share of GDP in 2015-16: Debt will be falling as a share of GDP
from 2015-16. This is a year earlier than forecast at Autumn Statement.By 2014-15, the deficit
is forecast to have fallen by half, from 10.2% at its peak in 2009-10, to 5% in 2014-15.In 201819, the government will have a surplus (will raise more in taxes than is being spent) of £5.2
billion.
The tax-free personal allowance is being increased in April 2017, to £11,000: To make
work pay and ensure families keep more of the money they earn, the tax-free personal
allowance – the amount people earn before they have to start paying tax – will rise to £10,800
in 2016-17, and £11,000 the year after.The increases to the personal allowance from £6475 in
2010, to £11,000 in 2017-18 will save a typical taxpayer £905.To make sure the full benefits of
the personal allowance increase are passed on to higher rate taxpayers, the government will
also increase above inflation the point above at which higher earners start paying 40% tax. It
will increase by £315 in 2016-17, and by £600 in 2017-18 - taking it to £43,300 in 2017-18.
A new Personal Savings Allowance will take 95% of taxpayers out of savings tax
altogether: From April 2016, a tax-free allowance of £1,000 (or £500 for higher rate
taxpayers) will be introduced for the interest that people earn on savings.If they are a basic rate
taxpayer and have a total income up to £42,700 a year, they will be eligible for the £1,000 taxfree savings allowance.If they are a higher rate taxpayer and earn from £42,701 to £150,000,
they’ll be eligible for a £500 tax-free savings allowance.
Introducing the Help to Buy ISA – every £200 people save towards their first home, the
government will put in an extra £50, up to a maximum bonus of £3000: The government
has already helped people to buy a home with Help to Buy, which allows people to purchase a
home with just a 5% deposit.The government is now going further. To help first time buyers
save for a deposit, it is introducing a Help to Buy ISA.People will be able to open an ISA, save
up to £200 a month towards their first home, and the government will boost it by 25%. That’s a
£50 bonus for every £200 people save, up to £3000.
People will have complete freedom to take money out of an ISA and put it back in later in
the year: ISAs are being reformed so that instead of being able to put up to £15,240 in the
2015-16 tax year into an ISA in total, people can take out their money and put it back in within
the same year, without losing their ISA tax benefits - as long as the repayment is made in the
same financial year as the withdrawal.
£1.25 billion for children’s’ mental health services: An extra £1.25 billion will be spent on
mental health services for children and new mums – helping more than 110,000 people.
Cancelling the fuel duty increase scheduled for September: Fuel duty will be frozen again;
since 2011, the government has cut and frozen fuel duty, saving a typical motorist a total of
£675 by the end of 2015-16.By the end of 2015-16 fuel duty will have been frozen for five
years, resulting in the longest duty freeze in over 20 years.
Cutting beer duty for the third year in a row: There will be another penny off a pint, a 2%
cut for spirits and most ciders, and a freeze on duty on wine.
Up to five million pensioners will be given the freedom to sell their annuity for a cash
lump sum: From April 2016, people who already have an annuity will be able to now
effectively sell it on, so that they too can benefit from the pension freedoms announced at last
year’s Budget.Currently, people who have bought an annuity are unable to sell it without
having to pay at least 55% tax on it. From April 2016, the tax rules will change so that people
who already have income from an annuity can sell that when they choose and will pay their
usual rate of tax they pay on income, instead of 55%.
Charities will be able to claim more gift aid on small donations: The amount of small
donations charities can get an extra 25% top up payment on in gift aid without needing any
paperwork is increasing from £5,000 to £8,000 a year.The government expects 6,500 charities
to claim in full the higher new cash boost of £2,000 a year – nearly double the current amount.
Farmers will have more time to average their profits for income tax: This extends the
period from two to five years, and will give farmers additional security as they typically have
volatile profits due to uncontrollable factors such as the weather.
We will abolish the annual tax return: Millions of individuals will have the information
HMRC needs automatically uploaded into new digital tax accounts. Businesses will feel like
they are paying a simple, single business tax – and again, for most, the information needed will
be automatically received.
Support for all regions across the UK: Working with Transport for the North, the
government will look at rolling out better roads, quicker journeys and improved rail
connections between the major cities of the north, as part of the government’s plan to build a
Northern powerhouse.The government is also giving even more powers to local areas, with a
new devolution deal for things like transport, business support and skills for West Yorkshire,
and more planning powers for London.Ten Enterprise Zones across the country are also being
supported to go further to create growth and jobs.The government is also working on a Cardiff
city deal and opening negotiations on the Swansea Bay Tidal Lagoon.
Making sure banks pay their fair share: The government is increasing the rate of the bank
levy (one of the taxes that banks pay) from 1 April 2015.This will raise an additional £900
million a year.
Increased support for the oil and gas sector: The oil and gas sector provides highly-skilled
jobs, energy security and makes a significant contribution to the UK economy.To encourage
further investment in the North Sea, the government will introduce a new Investment
Allowance and reduce the supplementary tax charge on oil and gas companies further, from
30% to 20%, from 1 January 2015.The rate of Petroleum Revenue Tax paid on older oil and
gas fields will also be reduced from 50% to 35%.These changes are expected to increase oil
production by around 15% by 2019, and drive £4 billion of new investment over the next five
years.
Faster broadband and better mobile networks: The government is investing up to £600
million to deliver better mobile networks, and is announcing a new ambition that ultrafast
broadband of at least 100 megabits per second should become available to nearly all UK
premises in the country.
Introducing postgraduate research loans: Loans up to £25,000 will be available for
postgraduate PHD and masters research students.The government will also conduct a review
into how the government can strengthen its funding for postgraduate research.
Further investment in science and innovation: Future economic success depends on future
science success. The government is investing £140 million in world class research on the
infrastructure and cities of the future, and £40 million in research into what is known as the
Internet of Things. This is the next stage of the information revolution, connecting up
everything from urban transport to medical devices to household appliances.The government is
also launching a new UK research initiative into the future potential of digital currency
technology, supported by a £10 million increase in funding in this area.
The government will consult on a tax relief for local newspapers: Local newspapers are a
vital part of community life, but they’ve had a tough time - so the government is announcing a
consultation on how to can provide them with tax support.
UK-India Bilateral
UK-India Trade Review (in £ million)
%
change
UK
Imports
from
India
%
change
4017
+36.49
5446
2011
5488
+36.61
2012
4567
2013
Total
%
change
India’s
Balance
of Trade
+25.86
9463
+30.16
1429
5868
+7.74
11356
+20.00
+380
-16.78
6010
+2.41
10577
-6.85
+1443
5118
+12.06
6186
+2.92
11304
+6.87
+1068
2014
3893
-23.93
6566
+6.14
10459
-7.47
+2673
January
2015
271
+7.53
546
-1.62
817
+1.23
+275
Year
UK
Exports
to India
2010
(Source: Office for National Statistics and Overseas Trade Statistics, HM Customs & Excise)
Trade and Investment Enquiries from India:
Trade and Investment Enquiries from UK:
Tenders from India:
45
04
23
UK Foreign Secretary’s visit to India on March 12, 2015
Rt Hon Philip Hammond, Secretary of State for Foreign and Commonwealth Affairs visited
India on March 12, 2015 to open the new British Deputy High Commission in Chandigarh,
attend the first meeting of the British Business Group, and meet with the Chief Ministers of
Punjab and Haryana. During his visit, the UK Secretary also met with SmtSushmaSwaraj,
Hon’ble Minister for External Affairs and ShriArunJaitley, Hon’ble Minister of Finance,
Government of India.
Visit of ShriArunJaitley, Hon’ble Minister of Finance, Government of India to UK
during March 13-14, 2015
ShriArunJaitley, Hon’ble Minister of Finance, Government of India visited UK to unveil the
statue of Mahatma Gandhi in Parliament Square, London during March 13-14, 2015. The
Finance Minister was accompanied by ShriSimanchala Dash, Private Secretary and Shri Manoj
Joshi, Joint Secretary, Department of Economic Affairs. An 11 member business delegation of
the Federation of Indian Chambers of Commerce and Industry (FICCI) led by Dr JyotsnaSuri,
President, FICCI also accompanied the Minister for various business engagements within the
UK.
ShriJaitley called on TRH Prince Charles, The Prince of Wales. He called on Rt Hon David
Cameron, Prime Minister of the UK at No 10, Downing Street on March 14. The Hon’ble
Minister earlier had a bilateral meeting with Rt Hon George Osborne, Chancellor of the
Exchequer during which a number of issues with regard to the India-UK economic and
financial relations were discussed. The two leaders discussed the progress made since 2010 in
strengthening and deepening co-operation between Britain and India on economic and financial
issues, including increased inward investment in each other’s economies. The UK has
established itself as the biggest major investor in India in the G20, and India invests more in
the UK than it does in the rest of the EU combined. The ministers affirmed the importance of
continuing this progress in the future, building on each country’s respective strengths.
Following the bilateral meeting, Mr. Osborne hosted a Breakfast Roundtable meeting at No 10,
Downing Street, which was attended by prominent members of Britain’s economic and
financial community. The Minister also met Rt Hon Ed Miliband, Leader of the Opposition and
Rt Hon Keith Vaz MP for Leicester East.
The bronze statue of Mahatma Gandhi made by the leading British Sculptor Mr Philip Jackson
was unveiled in the Parliament Square, London on March 14, 2015. During the unveiling
ceremony of the historic statue of Mahatma Gandhi, the Minister said, “Nobody embodies the
deep and enduring connections between the world’s oldest democracy and the world’s largest
democracy as well as Mohandas Karamchand Gandhi – the Mahatma – whose statue is being
unveiled in Parliament Square.” “Gandhiji will find himself set permanently in stone very close
to the place he occupied transiently, in flesh and blood, on his first night in London more than
one hundred and twenty five years ago”. During the ceremony, Prime Minister Cameron said,
“For me there are three reasons in particular why I believe this statue is so important for our
country. The first is that in putting Gandhi in this famous square we are giving him an eternal
home in our country. The man who turned the politically unimaginable into the politically
inevitable, whose work in South Africa paved the way for Mandela and whose doctrine of
Satyagraha became the inspiration for the civil rights movement across the world. Second, this
statue celebrates the incredibly special friendship between the world’s oldest democracy and its
largest. Finally, this statue celebrates the universal power of Gandhi’s message ‘Sab kosanmati
de bhagavān’. I hope that as Gandhi takes up residence in this square at the heart of our politics
and democracy that we can all be blessed with the wisdom of Gandhi today, tomorrow and for
generations to come.” The unveiling ceremony was attended by Rt Hon SajidJavid, Secretary
of State for Culture, Media and Sport, Lord Meghnad Desai, Lady Desai, Indian veteran Actor
Mr Amitabh Bachchan and other important dignitaries. The ceremony also featured personal
reflections from Mahatma Gandhi’s grandson, ShriGopalkrishna Gandhi, former Governor of
West Bengal.
On the first day of his visit, the Finance Minister participated in an event on ‘Investment
Opportunities in India’ hosted by the High Commission of India, the UK-India Business
Council and FICCI. ShriJaitley highlighted the key outcomes of the Indian Budget 2015,
focussing in particular on how the announcements would impact British business investing in
India and also support the Government of India’s ‘Make in India’ initiative. He invited UK
investors to take advantage of opportunities opening up rapidly in the Indian economy.
The Minister also participated in a Roundtable Discussion hosted by the City of London and
the London Stock Exchange with London’s leading institutional investors at the London Stock
Exchange on March 13, 2015. During the discussion, Mr Xavier Rolet, CEO, London Stock
Exchange Group said that London Stock Exchange has more Indian companies listed on their
equity and debt markets than any other international market and also provides cutting edge
technology to some of India’s leading exchanges. He added that, India’s most dynamic
companies have access to the world’s largest pool of institutional investment capital here in
London.
The Hon’ble Minister also participated in the J.P. Morgan India Insights Luncheon
Presentation on March 13, and later that day inaugurated the Union Bank of India (UK Ltd)’s
subsidiary in London.
British Experts on River Cleaning calls on Uma Bharti
A team of experts from UK called on Smt Uma Bharti, Hon’ble Minister for water Resources,
River Development and Ganga Rejuvenation to discuss Clean Ganga Mission. The three
member team was accompanied by Mr.Julian Evans, British Deputy High Commissioner in
India and Ms. Melissa Else, Second Secretary Energy Security. The British experts also gave a
power point presentation on measures taken to clean River Thames in UK. During the
discussions the Minister emphasized on the need to utilise the assets already created in
Varanasi during Ganga Action Plan at the first instance so that it can be revived by July this
year. Dr.Martin Griffiths, Former Head of Water Quality for the UK Environment Agency and
Deputy Director of Regulation in the Department of Environment, Food and Rural Affairs,
who was one of the member of the team gave a detailed account of the assets created and
presently lying unutilized on the banks of Ganga at Varanasi.Dr.Griffiths was one of the
experts who was associated with Ganga Action Plan-I. The other two experts were Mr.Ben
Piper, Hydrologist and water resource planner from Atkins consultants and Mr. Gwyn Rees,
Director, Centre for Ecology & Hydrology and Science Area Lead for water
resources..SushriBharti thanked British experts and expressed the hope that her Ministry looks
forward for a long and fruitful association with them in Clean Ganga Mission. Secretary of the
Ministry Shri AK Bishnoi,AdditionalSecretayDr.Amarjeet Singh, Director National Mission on
Clean Ganga, Shri TVSN Prasad and senior officials of the Ministry were also present during
the discussions.
UK clears first batch of Indian Alphonso mangoes post year-long ban
The UK cleared the first batch of the premium Indian Alphonso mangoes, dispatched after
lifting the ban on the fruit by the EU, this week. Two Mumbai-based exporters sent the king of
the fruits after the Agricultural and Processed Foods' Export Development Agency (APEDA)
gave option of vapour heat treatment (VHP) to the exporters, who were skeptical about the
proposed treatment to eliminate fruit fly infestation.
Sun Pharma to buy GSK's opiates business in Australia
Sun Pharmaceutical Industries Ltd, India's largest drugmaker by sales, said that it has agreed to
buy GlaxoSmithKline's opiates business in Australia to strengthen its pain management
portfolio.The business consists of analgesics made from raw materials found in opium poppy
plants, and includes two manufacturing sites in the states of Tasmania and Victoria.Glaxo's
decision to part with the opiates business comes as Tasmania's poppy industry is facing a tough
crop and the United Nations is expected to cut the state's poppy crop area this week.The
business employs 185 staff, including 155 in Victoria state and 30 in Tasmania state. Sun
Pharma said it would hire all employees from both sites.Both companies said they expect to
close the deal by August.
TCS unveils teaching resources to reduce UK digital skills gap
Tata Consultancy Services, India's leading IT services, has unveiled a new initiative in the UK
designed to help encourage more young people into digital careers. In partnership with The
Tech Partnership and MyKindaCrowd, has created a resource pack to help teachers educate
young people about possible roles in the IT industry, and the steps they need to take to achieve
that ambition.
Tata-funded automotive research centre to come up in UK
The Tata Group’s former and current chairmen, Ratan Tata and Cyrus Mistry, respectively,
unveiled the foundation stone of a £150-million centre, targeting pioneering automotive
research, in central England, as part of efforts to enable the UK plug its development skills
gap.Funding for the National Automotive Innovation Centre has come from Jaguar Land
Rover, Tata Motors and the University of Warwick, on whose campus the centre will be built,
as well as from the British Government.Once built, it will provide 33,000-metre square space
for 1,000 engineers, designers and academics.Facilities will include a design and simulation
space, a laboratory focused on advanced propulsion systems, and a highly advanced drive-in
car simulator.The centre will also be used as part of Jaguar Land Rover and Tata Motors’
research into driverless cars.
Tata JLR announces mega 600 million pound investment in UK
Tata Motors-owned luxury car maker Jaguar Land Rover will invest 600 million pounds in the
UK as part of its expansion plans, including doubling the size of its operations at its
headquarters in Coventry. The funds will be pumped into its R&D and manufacturing divisions
across three JLR sites in the West Midlands region of England - Castle Bromwich Advanced
Manufacturing Plant; Whitley Advanced Design and Development Centre; and the National
Automotive Innovation Centre in Coventry.
UK healthcare firm Bupa sees strong growth in India
British private healthcare group Bupa is eager to expand quickly in India's fast-growing health
insurance market, once a rule change on foreign investment is implemented, the firm's chief
executive said.Bupa, which operates globally and gets 70 percent of its revenue from health
insurance, said in January it planned to raise its stake to a new maximum of 49 percent in its
joint venture with Max India, from the current maximum for a foreign investor in insurance of
26 percent.Bupa was the first foreign company to announce plans to raise its holding in an
insurance venture after the rule change was announced in late 2014.
Shell to set up global IT centre at Bengaluru
Global energy giant Shell announced setting up of a global information technology centre at
Bengaluru to provide IT support to all its business verticals.Shell India Markets Pvt Ltd will
create the in-house centre, which is expected to provide employment opportunities for several
thousand IT professionals by 2020. “The investment stems from a review of Shell’s global IT
projects and selected operations support capability that places greater emphasis on delivering
projects in-house,” it said, adding that the centre will form an integral part of the firm’s global
IT project delivery and support network.Shell said it selected Bengaluru for its competitiveness
and the availability of a skilled, diverse IT talent pool covering the broad range of skills and
disciplines that the firm needs worldwide.Shell recently signed a Memorandum of
Understanding with the Andhra Pradesh Gas Development Corporation, GDF Suez and GAIL
for setting up a Floating Storage Regasification Unit (FSRU) project in Kakinada in Andhra
Pradesh.
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