What’s in Store for 2014?
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Chris Longbottom, Kantar Worldpanel Economist Roger Martin-Fagg Peter Backman, Chief Executive, Horizons Foodservice
Green shoots in the economy are impacting on retail and foodservice reflected in more positive data all round. Economist Roger Martin–Fagg, Horizons Foodservice chief executive Peter Backman and Chris Longbottom at Kantar Worldpanel shared their insights on what the numbers might mean for the industry in 2014. THE OUTLOOK FOR the economy has started to improve and there are positive signs of growth on the horizon for the food industry. This was the message from buoyant economist Roger Martin-Fagg to the BFFF conference. Mr Martin-Fagg supported his message with key indicators such as the fact that in November UK bank’s net lending was positive after three years of contraction - which means an increase of money in the system. Retail sales have also been picking up since last April. Last year’s good summer helped as did a good performance in December. With manufacturing, construction and services all moving up the growth charts, there are more reasons to smile even though construction and manufacturing have a long way to go to match pre-recession levels of 2007. Services have already recovered to their pre-recession level. With less doom and gloom in the media over the economy, confidence is rising. Although our exports outside Europe are growing in importance, Europe still takes 42% 38 THE BULLETIN I MARCH/APRIL 2014
of UK exports and the market remains flat. Not so the US. Fuelled by a 30% drop in household energy bills, it’s economy is roaring ahead. For 2014, he forecasts that the Base rate will stay at 0.5%, but will have gone up to 2.25% by the end of 2016. He believes wages could increase by 3% - if they go up by 4% and above, then interest rates will rise in mid-2015. House prices will rise 5% outside central London. Unemployment will fall to below 7% but will not trigger interest rate increases. Inflation will be 2.5% and he predicts consumer spending will grow at 3%. Overall GDP in real terms will grow 2% and bank net lending will rise by 3%. In terms of the world economy, he puts Eurozone growth at under 1%, US 2.8%, China 5%, India 5%, Canada 2.3% and Australia 2.5% with world growth at an average of 2.8%. He predicts that commodity prices will be flat or falling in 2014. He explained that wheat stocks are high, more US and Northern Europe acreage planted, and government measures reducing speculative buying are in place. He expects oil prices will
begin to move towards $60 a barrel. On exchange rates, he predicts the US dollar will stay at $1.60 to the pound, rise 5% against the Euro Sterling will average 1.18 against the Euro Sterling will average 1.90 against the Aussie dollar. Horizons Foodservice chief executive Peter Backman gave an update on the upswing in the foodservice sector as consumers finally start dining out again. He notes that while recovery is slow the new dawn may not be far away. Dining out patterns are changing with more people eating out, but doing so less often and spending more on each occasion. This means the whole market is expanding, but slowly. Other notable foodservice trends are the move by supermarkets to get into restaurants and cafés to drive customers to stores, typified by Tesco’s purchase of Giraffe and artisan coffee shop chain Harris + Hoole. Mr Backman notes that other large retailers could adopt the same model.
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