Lately it seems that if it’s not bad news it’s worse news.
Well, today there are two lots of bad news for Britain as separate reports are released hinting at harder economic times ahead.
A quarterly poll conducted by the Confederation of British Industry (CBI) has revealed that from June to August business in Britain’s Service sector shrank. Of the196 consumer, business and professional service firms participating in the poll the majority indicated that demand had decreased from three months previously with confidence withering as a consequence.
It appears that the small bunch of optimistic economists who expressed hopes for a third quarter modest rebound will be disappointed and that any kind of recovery from recession will be protracted and gruelling.
The head of economic analysis at the business lobby, Anna Leach, hammered the disenchantment home, stating: ‘Conditions in the service sector have not improved as expected this quarter, with firms now more negative about the overall business situation than they were three months ago’.
The second report released today discussed the increasing likelihood of the price of staple foods being hiked. Last month we reported that an estimated 130,000 people acquired essential food products they simply couldn’t afford to buy from charity food banks, and last night a Tory MP discussed the severe, potentially dangerous impact high food prices were having on families across the nation. Some parents even have to forgo meals themselves in order that their children can eat. With the cost of basic essentials like bread, beef, chicken, eggs and pasta set to rise, this situation can only worsen.
A thirty-five state drought in the U.S. combined with a more than miserable UK summer has resulted in delayed and destroyed harvests, leading to potentially painful increases in the costs of certain foods.
Crops across the U.S. have suffered due to drought and some large stretches of arable land have even been abandoned. Subsequently, the production, distribution and cost of items like bread, pasta and other grain based products will be significantly affected, and with soaring feed costs meat is also likely to become much pricier. The U.S. is also responsible for producing almost half of the world’s corn and that crop has been particularly badly hit. Another key U.S. export affected by the drought is soya beans, and their price has already hit an all time high.
Furthermore Britain will have to shoulder the additional cost of importing produce usually grown within the nation after limited sunshine and limitless rain prevented the growth of the country’s most common vegetables.
Although the British Retail Consortium has alleged that food price rises have slowed over the past year, the consortium’s director general, Stephen Robertson, has warned that with substandard U.S. harvests ‘creating a build-up of inflationary pressure’ ‘the relief may not last’.
A spokesman for the British Retail Consortium also confirmed that Britain’s households will soon feel the brunt of increasing costs: ‘The drought is not yet having an impact but it will work through to meat prices because of the price of animal feed and ultimately to things such as bread and pasta.’
The G20 group of leading industrialised economies are being pressured to hold an emergency meeting to find a solution to the world food supply problem. This week senior figures from G20 will meet to discuss rising food prices but expectations for action prior to the grain supply report in mid-September are low.
Director general of the UN’s food and agriculture organisation Jose Graziano Da Silva asserted yesterday that although he would not classify the current situation as a ‘crisis’ it could rapidly become one if southern hemisphere harvests were also poor. He stated: ‘We need co-ordinated action and I believe that the G20 is responsible enough for this action.’ Da Silva was also keen to issue a reminder that an increase in wheat costs and an increase in bread costs were not directly proportional.
Although there’s no need to raid Tesco’s bakery and stock up just yet, this news combined with that of the under-performing business sector follows the recent gloomy trend.
Comments are closed.