APPRENTICESHIP LEVY LAUNCHED INTO CHAOS

CITYAM.COM
THURSDAY 6 APRIL 2017
NEWS
03
Strong services
prompt growth
upgrade for UK
JASPER JOLLY
@jjpjolly
US BANKING giant JP Morgan has upgraded
its forecasts for growth as the
UK’s dominant services sector sustained
its momentum from the end of
2016 in the first quarter.
Economists at the bank revised up
their prediction of GDP growth from
1.7 per cent to 1.9 per cent this year.
This would represent a slight acceleration
in the economy’s expansion
from the 1.8 per cent growth recorded
last year.
The upgrade was driven by better
than expected findings of economic
surveys, including yesterday’s consensus-beating
services purchasing managers’
index (PMI), and an improved
outlook for Europe’s economy.
The closely watched PMI survey
showed the British services sector rebounded
in March as the amount of
new work reported jumped.
The PMI for the services sector rose
to 55.0 in March, IHS Markit reported,
significantly outperforming consensus
expectations of a 53.3 reading.
Services output has grown steadily
for 16 consecutive quarters, with the
sector contributing more than 85 per
cent of the UK’s economic growth in
the last quarter, according to the Office
for National Statistics.
Improved sentiment among businesses
has led JP Morgan to up its prediction
for business investment, while
it also expected a bigger boost to trade
after the fall in sterling since June.
The bank joins a host of economists
to revise up UK GDP growth, including
the Bank of England and the government’s
budget watchdog, the
Office for Budget Responsibility.
Economists at the bank noted a
stronger world economy has boosted
UK prospects, saying: “Our sense is
that a stronger global impulse is playing
a significant role in mitigating
some of the drags coming from domestic
demand at the moment.”
Gertjan Vlieghe has been on the Monetary Policy Committee since September 2015
Bank of England dove calls for
caution over interest rate hikes
JASPER JOLLY
@jjpjolly
A SLOWDOWN in British consumer
spending means the Bank of England
must act cautiously in raising interest
rates, according to a top official.
Gertjan Vlieghe, a dovish member
of the Bank’s rate-setting Monetary
Policy Committee (MPC) said: “A rate
hike that turns out to be premature is
a more serious mistake than one that
turns out to be somewhat late.
Caution is warranted.”
He said growth in consumer
spending will likely slow down,
putting the brakes on one of the
main drivers of the UK’s unexpectedly
strong recent economic growth.
“I think the slowdown is more
likely to intensify than fade away,”
Vlieghe said in a London speech.
Apprenticeship
levy ‘a wilful
waste of time’
CONTINUED FROM P1
While the levy will be paid by
businesses with a payroll above
£3m per annum, Sam Bowman of
the market-liberal Adam Smith
Institute said workers will pay the
price through lower wages.
“Forty-four per cent of new
apprentices are over 25. Nearly one
third of people do not complete
their apprenticeship. And most are
low-quality, with just 30,000
positions being at a higher level
than a school GCSE as of the end of
2015,” Bowman said.
“In light of that, the target to
create 3m apprenticeships by 2020
looks both unattainable and a
wilful waste of time and money. We
do not need 3m bogus
apprenticeships, funded by a new
payroll tax, just so the government
can get a few good headlines.
Nearly one third (29 per cent) of
firms admit they will offset the cost
of the levy by adapting existing
training programmes so they can
be officially accredited as
apprenticeships, the CIPD survey
shows. Thirty-six per cent said “it
will force them to reduce
investment in other areas of
workforce development”.