Money Round Up – Social Mobility Pledge milestone, US NAFTA changes, UK economy
Please note this blog post was published over 12 months ago and so may not include the most up-to-date information, for example where regulation around investing has changed.
Claudia and Rebecca celebrate good news about the Social Mobility Pledge and present the latest economic update. You can learn more about these stories with our economic updates here.
We start this week with the exciting news that the Social Mobility Pledge now covers over one million workers across the UK.
Here at True Potential Investor we were one of the first businesses to sign the pledge, which commits employers to progressing talent from all walks of life.
The Social Mobility Pledge was launched earlier this year by the Harrison centre for social mobility and Justine Greening MP. To have already reached a million employees covered, with the likes of BT, ITV and Adidas signing up, it really is a remarkable achievement.
Our Managing Partner, David Harrison, started the Harrison Centre for social mobility, and has a social mobility story of his own, having started out in pit mining village in county durham. His entrepreneurial spirit helped him to progress in life, and this is what social mobility is all about, bettering yourself no matter what background or circumstances you come from.
Social mobility plays a key role in our business, with apprenticeships and our academy scheme helping to give everyone a chance of success. It is great to see this spirit of social mobility now spreading throughout the UK with the social mobility pledge.
The big story from the past week has revolved around the North America Free Trade Agreement. As a trilateral accord between the US, Mexico and Canada, NAFTA, in its current form, was designed to expand trade and is regarded as being generally successful. For example, Trade increased from two hundred and ninety billion dollars in nineteen ninety three to one point one trillion dollars in twenty sixteen.
However, the Trump administration has been critical of NAFTA. They say NAFTA allows unfair competition from cheap labour in Mexico as well as biased advantages for Canada in areas such as agriculture, car tariffs and cultural provisions.
Whilst the States recently reached an accord with Mexico, officials from the US and Canada announced at the “eleventh hour” that they had also arrived at an agreement after a turbulent few weeks of negations, thereby saving the three-way pact. The resulting deal, a remake of NAFTA, is now called the United-States, Mexico, Canada agreement – the USMCA.
The most notable compromises to get agreement between the parties include changes to auto-company directives; previously criticised as being heavily biased against US manufacturers. Following the new agreement, sixty five percent of auto-components must be made within North-America and thirty percent of the car must be produced by labourers earning at least sixteen dollars an hour. The aim of these recent policies is to dampen the impact of cheap labour in Mexico and cheaper imports from abroad.
Moving on from this, Trump is now looking to commence direct trade talks with Europe and Japan. This could be a tactical move to call out China. A trend is emerging with Trump, his stance is tough initially, but once he reaches the table, sensible terms can be agreed.
The sudden desire to reach agreements through direct negotiations on a bilateral basis appears positive for global trade. Yes, it threatens to dismantle the World Trade Organisation framework for global trade that has existed for many years. However, the disproportionate trade imbalances that have emerged under world trade organisation rules cannot be sustained in the long term. By addressing these now, the world can avoid an even bigger issue in the future.
One of the most closely observed indicators of business activity rebounded this week, with the UK manufacturer’s Purchasing Managers Index rising from a revised fifty three point zero in August to fifty three point eight, exceeding analyst expectations of fifty two point five. As a rule of thumb, anything above fifty reflects an expansion; in areas such as new orders, production, inventory levels, supplier deliveries and employment. The UK PMI has now indicated ongoing expansion for twenty six consecutive months.
The same pressures impacting UK businesses remain but appear to be receding as the UK’s negotiations with the EU reach a climax. The easing of trade tensions has fed through to recent confidence data with firms indicating increasing new orders, both domestically and internationally. Recruitment into smaller and medium sized businesses also increased over the month, outweighing headcount reductions in global firms, who are generally impacted by international trade policy concerns.
There is a growing sense that the UK is poised for a strong rebound once decisions are taken in relation to the UK leaving the EU.