Which factors are contributing to economic growth being so poor?
Rob Kent-Smith, head of national accounts at the ONS, said: “Our initial estimate shows the UK economy growing at its slowest pace in more than five years, with weaker manufacturing growth, subdued consumer-facing industries and construction output falling significantly.”
So what’s to blame for this sluggish rate?
With many economists forecasting a first-quarter growth closer to 0.3%, these figures seem extreme, and there are many factors that have played into them. Brexit uncertainty has played its part; before the referendum, the UK was top of the global growth league of our main industrial competitors, whereas it now sits near the bottom. There haven’t been any abrupt changes concerning Brexit in the last three months, however, to explain this sharp drop in GDP.
Some point to the weather, with the ‘Beast from the East’ and its counterparts affecting the construction sector and causing up to 30 days to be lost on some building sites, thanks to the freezing conditions. The ONS, however, has labelled the impact of the weather as ‘generally small’, with demand even increasing in some sectors, such as energy.
John Hawksworth, Chief Economist at PwC, reminds us that, “these are only preliminary figures and are based largely on estimates rather than actual data for March, when the snow was at its worst. So, there could be larger than usual revisions.”
The ONS are suggesting three reasons why the rate is so low. Firstly, construction had a very bad start to the year with a drop-in output of more than 3%. Secondly, 2017 saw a strong performance by manufacturing with factory output up 1.3% at the end of the year. A slower Eurozone has led to weaker demand for UK exports. Thirdly, the low consumer spending power is affecting the service sector which accounts for around 80% of the entire economy but only showed 0.3% growth in the first quarter.
Whatever the reasons may be, Philip Hammond is remaining positive. He maintains that the economy has remained fundamentally strong, despite the setbacks that the weather has brought. Time will tell if his positivity continues when further figures become available.
A cautionary tale: the Lazio case demonstrates who cyber criminals are targeting
Cyber-security is more important than ever before, as Serie A football club, Lazio, found out the hard way in March. After signing Dutch centre back Stefan de Vrij in 2014 from Feyenoord, Lazio agreed to pay his £6.8m fee in instalments. Nothing seemed out of the ordinary when they received an email, including bank details, appearing to be from Feyenoord requesting the final payment of £1.75m, so they dutifully sent over the money. It wasn’t until later when Feyenoord hadn’t received the payment and, in fact, claimed to have no knowledge whatsoever of the email being sent, that alarm bells began to ring.
The money has since been traced to a Dutch bank account with no connection to Feyenoord at all. Somebody posing as the club with an official email signature had taken the money and run. Clearly this cyber-attack, like most, was driven by the goal of monetary gain and so we can assume that it’s financial teams in organisations that are most at risk of being targeted. The most successful of these infiltration attempts are made by individuals hiding in plain sight, posing as legitimate and well-established contacts and targeting more junior employees.
This is why it’s so important for organisations to be aware of these risks and to encourage a culture of education and communication that brings different teams together. An update in company culture and structure such as this needs to be instigated from the top. The Lazio case highlights the fact that financial directors and CFOs need to advocate a proactive discussion about cyber-security across finance and IT departments.
New technologies should also be embraced to help where possible. User and entity behaviour analytics (UEBA) is one example which captures user and login data to build up a profile of usual behaviour. This makes it much easier to recognise an irregularity or data breach, such as an external party getting hold of an employee’s login details.
Ultimately, human error will continue to be a factor so employees need to be made aware of just how easily simple mistakes can be made and what those errors can lead to. Some incidents will remain inevitable but the focus should be on learning and development rather than blame and punishment if companies and individuals are to move forward to a more protected and efficient environment.