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Issue 101 September 2023INFORMED COMMENT FROM THE BRITISH ADHESIVES & SEALANTS ASSOCIATIONBASA Annual Dinner, Saturday 2nd December 2023 Bookings Open!BulletinEU to drop ban of hazardous chemicals aer industry pressureThe European Commission is poised to break a promise to outlaw all but the most essenal of Europe’s hazardous chemicals, leaked documents show.8UK REACHWhat are my opons under UK REACH if we (GB based company) choose to import a new substance?Economic UpdateRead Roger Marn-Faggs latest update.1016New Members in 2023 This years BASA Annual Dinner will be returning to the Chester Grosvenor Hotel on Saturday 2nd December 2023. We last held the annual dinner here in November 2019 and we are looking forward to seeing BASA Members embrace the Christmas spirit and join us for a night of good food and good company. We know our members are all working really hard so this is a chance to let your hair down and have some well deserved entertainment and a night of social networking and fesvity.BOOK NOW
BASA Bullen Issue 1012Open Industry Forum Registraon Now Open - Free to BASA membersAnnual Dinner Bookings Now Open!Registraon is now open for the BASA Open Industry Forum on Thursday 2nd November 2023 at the Sketchley Grange Hotel, Hinckley.The morning starts with Tea & Coee at 9:00 am followed by 3 scheduled sessions on: Standards and Products Informaon, Environmental Issues & BASA Member Benets and Consultants round-up of current issues. There will be a buet lunch with networking and poster presentaons at 13:15.Don’t miss an excellent opportunity to send any new starters to this free networking event to learn about the industry and make contacts.For this years BASA Annual Dinner we will be returning to the CHESTER GROSVENOR Hotel on Saturday 2nd December 2023. The event was last held here in November 2019, we are looking forward to seeing BASA Members embrace the Christmas spirit and join us for a night of good food and good company. You are all working really hard so this is a chance to let your hair down and have some well deserved entertainment and a night of social networking and fesvity.Want to be a Gold Sponsor of the Chairman's Drinks Recepon and support the associaon?Sponsorship Package includes; • Social media promoon • Publicity in the BASA Bullen • A one page advert in the 2024 BASA Members Handbook • Table of 8There are only 3 Gold Sponsorships available for this event.Book here.Full dra programme and booking hereBook now
3 BASA Bullen Issue 101 BASA Bullen Issue 101John Young died peacefully in his sleep at the hospice earlier this year. John spent the majority of his life in the industry and was even served as president when the BASA association was formaly known as BAMA. He was the MD of Swift in the 70's when he was in his early 30's and went on to become MD of Monach adhesives. After leaving Monach he started his own business, John Young adhesive systems, before setting up Sealock Ltd in 1983 manufacturing Hotmelt and aqueous Adhesive for the UK market. Sealock established a further sister adhesive manufacturing company in France to support the French and Southern Europe markets in the 1990s and further expansion included a manufacturing company in Poland and Russia to support local geographical markets. The business was sold by the young family in 2018. John is survived by his wife, Brenda who he had been married to for 61 years and his two sons Peter and Chris. Sadly Darren Ogden lost his battle against cancer on Friday evening (10th March), aged 54. Darren was known to many at Kenyon as our “glue stick expert”, with over 13 years’ service to the company. He was a lot more than just an employee – he was a good friend, classed as a “glue family member” and will be very much missed by not only us and his family, but by all who knew him or ever had the privilege to meet him. Darren was very much into his sports, playing golf, squash, cricket and a keen runner – he even won the BASA Glue Pot Trophy in 2012 – a coveted trophy in the glue world. He was a bright character, as colourful as his shirts, with a quick wit sense of humour and a heart of gold, who would do anything to help someone out, sadly taken from us way too early.Sad News in the IndustryDarren OgdenDr. Henrik Follmann, John Young, Dr. Thomas Damerau and Chris Young (from le)BASA's late, former Secretary, David Williams' wife, Nadine Williams sadly passed away on 25th February 2023 aged 83, shortly after being diagnosed with Cancer.Nadine Williams & David Williams
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5 BASA Bullen Issue 101 BASA Bullen Issue 101Sco Bader Turkey establishedSco Bader is pleased to announce the formaon of Sco Bader Turkey.The new Turkish oce, based in Istanbul, has been established to oer Sco Bader’s key distribuon partners and customers local experse in the growing composite, adhesive and funconal polymer markets in Turkey and Central Asia.Whilst working in partnership with key Turkish distributors such as Telateks-Metyx Composites for composites and SAFIC ALCAN for funconal polymers, Sco Bader Turkey will also drive growth in strategic local markets such as automove and food packaging.Marie Ellio, Sco Bader’s Group Sales and Markeng Director, said: “We are delighted to commit to the growing Turkish market with the formaon of Sco Bader Turkey. The new oce gives us the opportunity to work even closer with our key distribuon partners to build on the success they have already delivered. We look forward to welcoming our new colleagues to the Sco Bader Group.”As part of the establishment of Sco Bader Turkey, the Sco Bader Commonwealth has donated to the DEC Turkey – Syria Appeal to help support vicms of the recent earthquakes that devastated parts of southern Turkey and Syria.Sco Bader Turkey’s ocial company name is: SCOTT BADER TR ÖZEL KİMYASALLAR SANAYİ VE TİCARET LİMİTED ŞİRKETİ.Sco Bader Joins Forces with Biesterfeld UK headquartered chemicals company, Sco Bader, has entered into a new partnership with Biesterfeld - Germany’s leading distributor of composites, rubber and specialty chemicals.The global manufacturer has secured Biesterfeld’s support within two segments - CASE and Performance Products - across several European regions, where the group will take its resins, gelcoats and acrylic dispersions to market. Specically focusing on Sco Bader’s composite and adhesives range, as well as funconal polymers used widely in coangs, adhesives, sealants and elastomers (CASE), Biesterfeld will be working with customers across a number of industrial markets on Sco Bader’s behalf - covering everything from building and construcon through to land transportaon and pipe relining.“The alignment between the two companies was clear from the start,” says Sco Bader’s Sales and Markeng Director, Marie Elliot. “As a long-standing, family-owned business with like-minded values the partnership makes perfect sense in terms of their capability and moral commitment. We have every condence that Biesterfeld can impeccably represent Sco Bader’s interests in Germany, Austria and Switzerland and beyond, and look forward to leveraging their connecons on the ground.”With both companies being operaonal some 100 years and beneng from a strong family inuence on either side, the partnership was naturally forged. As an employee-owned organisaon Sco Bader’s unique structure and charitable arm means that the group has to be especially scrupulous when it comes to building its network. Ensuring that any new arrangements reect a similar sustainability stance, code of pracce and shared values. As part of the Biesterfeld Group, Biesterfeld Spezialchemie oers extensive market knowledge and tailor-made, applicaon-based technical advice across eight business units, including CASE and Performance Products, and is acve worldwide.The Performance Products segment consists of three divisions; Composites & Tooling, Adhesives & Lubricants, as well as Electric, Electronic & Energy. The specialty oerings and tailor-made soluons enhance the performance of industrial and consumer products worldwide, improve producon processes and applicaon properes. “We're thrilled to oer Sco Bader's exceponal composites porolio, featuring top-of-the-line polyester resins, gelcoats, and adhesives that are specically designed for the marine and railway industries, among others,” says Dr. Johannes Marn, Product Manager. “Their unique re, smoke and toxicity fume (FST) system, Crestare, for example, sets them apart in the rail industry, providing added safety and reliability to our customers.”Biesterfeld’s CASE segment oers addives for coangs, adhesives, sealants, and elastomers for a broad spectrum of applicaons and has a specialist sales team represented all over Europe. “We are very excited about the new collaboraon with Sco Bader. The products from Sco Bader complement our porolio very well and allow us even more scope and possibilies”, says Saadet Bozat, Product Manager at Biesterfeld. Sco Bader and the Biesterfeld CASE team together at the European Coangs Show 2023On the composites side, Biesterfeld will be responsible for Sco Bader’s premium Crestare FST resins and Crestapol urethane acrylate resins, as well as its Crysc resins and gelcoats, Crestomer urethane acrylate structural adhesives and Crestax bonding pastes and will be responsible for the DACH region. In parallel, Biesterfeld’s CASE segment will drive sales of Sco Bader’s Texipol rheology modiers, Crestacryl solvent acrylic resins, Crestakyd alkyd resins and Texicryl acrylic dispersions and will be responsible for DACH, Poland, Czechia, Slovakia, Spain, Portugal, and the Balc States.“We’re pleased to announce the partnership ahead of JEC World in April as we strengthen our presence in core European markets and look forward to speaking with customers, old and new, about the benets this coalion will bring,” concludes Sco Bader’s Marie Elliot. Sco Bader is exhibing at JEC World in Paris 25-27 April on Stand M27 in Hall 6.
BASA Bullen Issue 10162023FEICA European Adhesive & Sealant Conference and EXPO 2023www.feica-conferences.comTarragona, Spain13-15 September 2023 PortAventura Convention CentreAd Tarragona A4.indd 1Ad Tarragona A4.indd 1 10/03/2023 09:3110/03/2023 09:31Supporting inspiration al people t o achieve extraordin ary t hings.For more information on the benefits of the Elite Sponsor package, please emaildaniel@socialpurposeproject.com | socialpurposeproject.com How do charities and n ot -for-profit organisations ben efit?The SPP has an experienced and talented team of professionals who will support recipient organisations by becoming an extension of their team. By embedding ourselves in the organisation and understanding the mission, we create a strategic plan that effectively supports the organisations public affairs and public relations activity in a way that works for them. We bring the valuable expertise, innovative ideas, and the high standard of professionalism that is needed to successfully achieve set objectives. The SPP guarantee that each individual recipient organisation will receive a minimum of 10 hours of specialist support per week. The SPP will work closely with the recipient organisation to: What problem are we solving?In recent years, operational costs have increased abruptly, and this has had a devasting impact on the third sector and not-for-profit organisations especially. The most recent NCVO almanac found that staffing costs account for 37% of total charity sector expenditure. The majority of charities in Britain are small and lack the resources to bring in specialist communications support. Public affairs and public relations play a pivotal role in determing how successful an organisation is in promoting their cause, raising funds and achieving social impact. Some of the most important causes and inspirational charities are failing to maximise their potential due to a lack of expertise in these specialist areas. Is your business passionate about supporting charities? Is your corporate social responsibility strategy at the heart of your business model? Do you want to help inspirational people achieve extraordinary things? What is the Social Purpose Project?The Social Purpose Project (SPP) is a pioneering social enterprise which provides specialist public affairs and public relations support for charities, campaigns, and causes. These services are delivered at no cost to the recipient organisation thanks to sponsors from the business community. During a difficult period of instability for the third sector, the SPP model gives charities and not-for-profit organisations access to skilled professionals who will help further their social impact and make a difference to society.PUBLIC RELATIONS: Develop an informed communications strategy.Secure national and regional media coverage.Plan a diverse mix of creative multimedia campaigns.Manage crisis communications and reputation management. Provide expert social media support.Organise events.Engage with government and officials. Organise meetings with MPs and Peers. Provide detailed policy research and political intelligence.Organise a parliamentary reception.Lead a stakeholder engagement plan.Help influence policy and debate. PUBLIC AFFAIRS: How t o becom e a sponsor?Your business can become SPP sponsor by making an unrestricted contribution of £25k. This sponsorship will allow the SPP team to the support a charity or not-for-profit organisation for 12 months. We guarantee 100% of the contribution will be spent on directly supporting the aims and objectives of the recipient organisation. As a sponsor, you can nominate the recipient organisation or select one from the list presented by the SPP. You will then receive quarterly reports on the progress and impact that is being achieved because of your sponsorship. Sponsors will also receive an official SPP pack which includes assets that can be used to promote your involvement.Your business can become an ELITE SPONSOR by making an unrestricted contribution of £100k. This sponsorship will allow us to support four charities or not-for-profit organisations.The sponsorship contribution has been purposely calculated so it provides exceptional value against the rates across the UK PR sector. According to PR Insider, a London-based boutique agency with a staff team of under 50 will typically charge a monthly retainer fee between £5k- £10k per month. The SPP sponsorship costs just £2,083 per month.
7 BASA Bullen Issue 101 BASA Bullen Issue 101Supporting inspiration al people t o achieve extraordin ary t hings.For more information on the benefits of the Elite Sponsor package, please emaildaniel@socialpurposeproject.com | socialpurposeproject.com How do charities and n ot -for-profit organisations ben efit?The SPP has an experienced and talented team of professionals who will support recipient organisations by becoming an extension of their team. By embedding ourselves in the organisation and understanding the mission, we create a strategic plan that effectively supports the organisations public affairs and public relations activity in a way that works for them. We bring the valuable expertise, innovative ideas, and the high standard of professionalism that is needed to successfully achieve set objectives. The SPP guarantee that each individual recipient organisation will receive a minimum of 10 hours of specialist support per week. The SPP will work closely with the recipient organisation to: What problem are we solving?In recent years, operational costs have increased abruptly, and this has had a devasting impact on the third sector and not-for-profit organisations especially. The most recent NCVO almanac found that staffing costs account for 37% of total charity sector expenditure. The majority of charities in Britain are small and lack the resources to bring in specialist communications support. Public affairs and public relations play a pivotal role in determing how successful an organisation is in promoting their cause, raising funds and achieving social impact. Some of the most important causes and inspirational charities are failing to maximise their potential due to a lack of expertise in these specialist areas. Is your business passionate about supporting charities? Is your corporate social responsibility strategy at the heart of your business model? Do you want to help inspirational people achieve extraordinary things? What is the Social Purpose Project?The Social Purpose Project (SPP) is a pioneering social enterprise which provides specialist public affairs and public relations support for charities, campaigns, and causes. These services are delivered at no cost to the recipient organisation thanks to sponsors from the business community. During a difficult period of instability for the third sector, the SPP model gives charities and not-for-profit organisations access to skilled professionals who will help further their social impact and make a difference to society.PUBLIC RELATIONS: Develop an informed communications strategy.Secure national and regional media coverage.Plan a diverse mix of creative multimedia campaigns.Manage crisis communications and reputation management. Provide expert social media support.Organise events.Engage with government and officials. Organise meetings with MPs and Peers. Provide detailed policy research and political intelligence.Organise a parliamentary reception.Lead a stakeholder engagement plan.Help influence policy and debate. PUBLIC AFFAIRS: How t o becom e a sponsor?Your business can become SPP sponsor by making an unrestricted contribution of £25k. This sponsorship will allow the SPP team to the support a charity or not-for-profit organisation for 12 months. We guarantee 100% of the contribution will be spent on directly supporting the aims and objectives of the recipient organisation. As a sponsor, you can nominate the recipient organisation or select one from the list presented by the SPP. You will then receive quarterly reports on the progress and impact that is being achieved because of your sponsorship. Sponsors will also receive an official SPP pack which includes assets that can be used to promote your involvement.Your business can become an ELITE SPONSOR by making an unrestricted contribution of £100k. This sponsorship will allow us to support four charities or not-for-profit organisations.The sponsorship contribution has been purposely calculated so it provides exceptional value against the rates across the UK PR sector. According to PR Insider, a London-based boutique agency with a staff team of under 50 will typically charge a monthly retainer fee between £5k- £10k per month. The SPP sponsorship costs just £2,083 per month.
BASA Bullen Issue 1018UK Government announces extension of CE mark recognion for businesses - but not for construcon products, yetECHA is calling for comments and evidence on;•UV-328 (2-(2H-benzotriazol-2-yl)-4,6-ditertpentylphenol)•UV-327 (2,4-di-tert-butyl-6-(5-chlorobenzotriazol-2-yl)phenol)•UV-350 (2-(2H-benzotriazol-2-yl)-4-(tert-butyl)-6-(sec-butyl)phenol)•UV-320 (2-benzotriazol-2-yl-4,6-di-tert-butylphenol)(EC numbers 247-384-8, 223-383-8, 253-037-1, 223-346-6)(CAS numbers 25973-55-1, 3864-99-1, 36437-37-3, 3846-71-7)Call for comments on the dra screening report on the presence and risk of the four phenolic benzotriazoles in arcles.Deadline for comments is the 18th August 2023.BASA does not intend to submit comments to this consultaon – so please either submit your own comments – or urgently get in touch if you wish BASA to support your case.Weblink: hps://echa.europa.eu/calls-for-comments-and-evidence/-/substance-rev/73501/termBASA members informaon relang to EU Chemicals Legislaon - CARACAL SummaryThe FEICA Chemicals Legislaon working group have posted a summary from CARACAL on CLP and joint REACH/CLP relevant secons.Employees working for BASA member companies can access the full posng by following the weblink. You must log in to your members account. If you do not have a BASA members website account yet, follow the instrucons in the weblink. If you are not a BASA member company, why not apply to become one of our Member companies?Call for comments and evidence – UV-328, UV-327, UV-350, UV-320The Department for Business and Trade has today announced an indenite extension to the use of CE marking for UK businesses. UKCA marking for construcon products is managed by DLUHC and as of today's date DLUHC sll intend to cease recognion CE marking in June 2025, which is confusing. BASA's view is that DLUHC are likely to eventually concede that UKCA marking of construcon products is unnecessary for products that are not safety crical.Please note that this announcement only refers to CE/UKCA marking of products covered under the Department of Trade and the announcement does not yet include construcon products. This comes as part of a wider package of smarter regulaons designed to ease business burdens and help grow the economy by cung barriers and red tape. Following extensive engagement with industry, Brish rms will be able to connue the use of CE marking alongside UKCA.The Business Secretary acted urgently on this issue, to prevent a cli-edge moment in December 2024 when UKCA was set for entry. This intervenon will ensure businesses no longer face uncertainty over the regulaons and can cut back on unnecessary costs freeing them up to focus on innovaon and growth.The page for Construcon products guidance connues to conrm that the DLUHC intenon is to end recognion of the CE mark in GB on 30 June 2025.In light of today's news from DBT we await any updates regarding construcon products. BASA will update members as soon as we have addional informaon.EU to drop ban of hazardous chemicals aer industry pressureThe European Commission is poised to break a promise to outlaw all but the most essenal of Europe’s hazardous chemicals, leaked documents show.On 11th July 2023, it was reported by Business Maers that it was understood that the EU’s execuve is on the brink of a climbdown under heavy pressure from Europe’s chemical industry and rightwing polical pares.The industry-led backlash is causing internal disquiet over the threat to public health and policymaking. One EU ocial said: “We are being pushed to be less strict on industry all the me.”A leaked legislave document seen by the Guardian proposes three opons that would restrict 1%, 10% or 50% of products containing hazardous chemicals currently on the market. The EU typically selects the middle opon.The leaked 77-page impact study forms part of a revision of targets in the EU’s Reach regulaon covering chemicals law, which is dated 13 January 2023 and due to be launched by the end of this year. The text could be altered but ocials say the opons under consideraon have not substanally changed.An EU ocial speaking on condion of anonymity said eorts to dilute the legal revision were helped by “a complete change in the wave of support for consumers and the environment” in Brussels, as MEPs in EU president Ursula von der Leyen’s European People’s party (EPP) became queasy about environmental reform.Read the full story here:https://bmmagazine.co.uk/news/eu-to-drop-ban-of-hazardous-chemicals-after-industry-pressure/
9 BASA Bullen Issue 101 BASA Bullen Issue 101Internaonal Adhesives & Sealant Day29 September is ‘Internaonal Adhesive & Sealant Day’!This is a request from the Brish Adhesives & Sealants Associaon to its member companies to send your sustainability news to FEICA so that they can add stories on the bespoke website FEICA is creang, that will launch on 29 September 2023. These stories (without naming your brand) will be highlighted on a dedicated page (sll under construcon) www.internationaladhesiveandsealantday.com/innovaonsInternaonal Adhesive & Sealant Day was globally recognised at the 2022 World Adhesive and Sealant Conference (WAC 2022). Its purpose is to promote adhesives and sealants as enablers of a sustainable future and to improve the general public's knowledge of our products.The idea is that on 29 September FEICA’s members, and the individual FEICA Naonal Associaons Member Companies (and others in the A&S industry) will share the FEICA posts (referring to the Int. A&S website) and highlighng how their (your) innovaons specically contribute to sustainable development!In this way we will create a real buzz about our enre industry.Please send your news/brochures etc. to i.alenus@feica.eu before 8 September 2023!
BASA Bullen Issue 10110BASA UK REACH – what are my opons under UK REACH if we (GB based company) choose to import a new substance?1. The best soluon for you is for your supplier to pick up the UK REACH obligaons. So, check if they have done a DUIN, Grandfathering, appointed an Only Representave. 2. Can you keep your imports under one tonne per annum? If so, you do not have to do a REACH registraon. Note this is one tonne per annum per substance – (not per product, look at the individual substances in the product and work out if it is under one tonne per annum (you will have to look at the total tonnage of this substance across your whole product porolio)). 3. Have you previously imported this substance in the 2 years prior to 1 January 2021? So in 1st Jan 2019 to 31st December 2020. Then you can submit a DUIN. A sample counts as a previous import. 4. If you are considering a new substance from a supplier that has not previously been registered under EU REACH, or for a substance that you had not previously imported in the two years prior to the 31st December 2020. (ie 1st Jan 2019 to 31st December 2020). You cannot benet from the delayed registraon process. You will need to follow the NRES process. For anything new since 1st Jan 2021 you would need to complete a NRES.New Registraon of an Exisng Substance (NRES).• The system is not yet in place to allow purchase of leers of access to dossiers or data from lead registrants or substance groups• Nor is it easy to complete full data requirements for exisng substances.• Not possible to purchase access to dossiers/data from substance groups.• So there are deferred deadlines for full registraon data (similar to DUIN/grandfathering).The steps are;• Submit Inquiry dossier (including substance identy informaon).• Aer Inquiry, HSE will inform if any deferred registraon applies.• Submit a registraon dossier with data waivers.• Pay registraon fee to HSE.• Manufacture/import may now commence.
11 BASA Bullen Issue 101 BASA Bullen Issue 101CLP in GB, NI and EUThis table summarises what needs to be done under the classicaon, labelling and packaging of chemical substances and mixtures regulaon (CLP) in Great Britain, Northern Ireland and the European Union. It is not a complete list – if there is anything missing that you need to know let Caroline Raine know! EU GB NI Mandatory EU Annex VI GB CLP mandatory (Divergence from ATP 16 onwards) EU Annex VI Addresses on labels and SDS EU address GB address EU or NI address. label as long as it does not contradict or cast Poison centre see BASA poison centres user guide) Mandatory – through the EU portal. You will need submit. Note some countries charge a fee. Voluntary – SDS or Mandatory – must follow EU format – i6z – sent directly to NPIS Safety Data Sheet New format by end of Dec 2022 – new version of REACH Annex II - Commission 2020/878, came into force on 1 January 2021 version of REACH Annex II – Commission (EU) 2015/830. HSE should be accept SDS in both formats. Be careful where substances fall under the 16th ATP onwards New format by end of Dec 2022 – new version of REACH Annex II - Commission force on 1 January 2021 REACH EU REACH - EU legal UK REACH – (eventually) via a GB For now DUINs and NRES. EU REACH - legal NI DUINs
BASA Bullen Issue 10112Step-by-step guide: How to start carbon accounngAs the urgency of addressing climate change grows, businesses and organisaons are increasingly turning to carbon accounng as a crucial tool to measure, manage, and reduce their carbon emissions. Carbon accounng is the rst step towards adopng sustainable pracces and fullling environmental responsibilies. In this step-by-step guide, created by xtonnes, we will walk you through the process of starng carbon accounng, empowering you to take meaningful strides towards a more sustainable future for your organisaon.Step 1: Dene your scope and idenfy emission sourcesBegin by dening the scope of your carbon accounng iniave. This involves determining what acvies, processes, and emissions sources you want to include. Will you focus solely on your organisaon's direct emissions (Scope 1) and indirect emissions from purchased energy (Scope 2), or will you also incorporate emissions other indirect sources (Scope 3)? What will your materiality threshold be to determine which categories of Scope 3 are most relevant and impacul to your organisaon?aligns with your organisaon's goals and resources. Common standards include the Greenhouse Gas Protocol and ISO 14064. Each provides guidelines for measuring and reporng emissions, helping you maintain consistency and credibility.Step 3: Carbon accounng tools and sowareInvest in carbon accounng tools or soware that streamline the process. These tools automate data collecon, emissions calculaons, and reporng. They not only save me but also reduce the risk of errors associated with manual calculaons.Step 4: Data collecon and calculaonGathering accurate data is the foundaon of eecve carbon accounng. Collect data on energy usage, fuel consumpon, travel distances and any other relevant metrics. If you’re worried about data quality, start with what you have and make a plan to improve it as your process matures. To help this process, engage with business areas and ensure that they recognise the purpose of carbon accounng. Give them clear expectaons about what data you need from them and the meframes for when you need it. Remember, it’s likely that they will not have all the data to create a perfect carbon footprint right away, which is why it is important that they understand this will be a connuous and improving process. Make sure they are aware that this data collecon will also benet them, as it will provide useful insight into their operaons and drive addional eciency improvements.To calculate emissions, use robust emission factors, which represent the amount of greenhouse gases produced Assess all potenal sources of carbon emissions within your dened scope. This could include energy consumpon, transportaon, manufacturing processes and more. Collaborate with relevant departments to ensure a comprehensive understanding of your enre value chain and emissions landscape.Clearly dening these boundaries early on will help to provide a framework for your accounng eorts.Step 2: Choose a carbon accounng standardSelect a carbon accounng standard that per unit of acvity. Various industry standards and databases provide emission factors to ensure accurate calculaons.Step 5: Establish baseline emissionsCreate a baseline of your organisaon's emissions to serve as a starng point for future comparisons. This baseline will be invaluable for tracking progress and evaluang the eecveness of your emission reducon iniaves.Step 6: Monitor and reportTransparent carbon reporng builds trust with stakeholders, both internal and external, and demonstrates your commitment to decarbonisaon. This means that it is important to connuously monitor your emissions data, track progress against your baseline and regularly report your ndings. Disclosing your carbon footprint, as well as your accounng methodology, externally means sharing your emissions data and related informaon with the public. This demonstrates accountability and can be done through various channels, such as annual reports, sustainability reports, a page on your website, or plaorms like the Carbon Disclosure Project (CDP). When it comes to communicang about climate acon within your organisaon, reporng informaon on a regular basis, for example as part of quarterly progress updates, is a good opportunity to relay performance, engage employees and gain extra buy-in.Step 7: Set reducon targetsBased on your emissions data and analysis, set ambious yet achievable carbon reducon targets. These targets will guide your eorts to minimise your carbon footprint and drive connuous improvement. Standards, such as the Science Based Targets iniave, ensure that targets help prevent the worst impacts of climate change. Step 8: Create emission reducon strategiesCreang an eecve emissions reducon strategy to achieve your carbon targets involves a systemac approach that is based on data-driven insight. It is key that any plan aligns with your organisaon's specic business goals, operaons and sustainability objecves. At xtonnes, we recommend creang a long list of intervenons, focussing on ‘mean’, ‘lean’ and ‘green’ categories.
13 BASA Bullen Issue 101 BASA Bullen Issue 101Once you have idened a long list of company-specic intervenons that will lead to carbon savings, you can then priorise these acons based on the potenal carbon impact, operaonal feasibility and capital costs. This informaon will form the basis of your decarbonisaon plan and help to determine whether acons should take place in the short-, medium- or long-term. Don’t forget to also consider enablers – the things that will help you achieve your acons, for example employee skills, governance or budgetary requirements. Step 9: Implement emission reducon strategiesImplement your decarbonisaon plan to achieve your reducon targets. This might involve energy eciency improvements, transioning to renewable energy sources, opmising transportaon and adopng circular economy pracces. Make sure to refer back to your emissions data regularly. This will help you measure progress, idenfy trends and make informed decisions as your strategy evolves over me. Step 10: Engage stakeholders and communicateIn addion to regularly reporng your emissions, it is important to connuously engage employees, customers, investors and other stakeholders in your carbon accounng journey. Decarbonisaon touches every part of your organisaon. By engaging internal and external stakeholders, you bring your people onboard and gain their support to take climate acon together. Transparent communicaon about your carbon reducon eorts builds support, fosters accountability, and showcases your commitment to sustainability. Your employees, suppliers, partners and investors will need to be engaged as part of your data collecon process, and as you work to improve your data quality and granularity, you will need to further engage these stakeholders. Supplier engagement will be parcularly important when it comes to improving your Scope 3 emissions (purchased goods and services) data over me.Carbon accounng to benet your organisaonCarbon accounng is a powerful tool that empowers organisaons to take aconable steps towards reducing their emissions. By following our step-by-step guide, you can iniate and navigate the carbon accounng process with condence. xtonnes will be aending the BASA Open Industry Forum in November to speak more about carbon accounng, with ps on how to get started or build on what you have done already.In the meanme, reach out to the xtonnes expert team, who will be happy to answer any quesons you may have or give you a demo of their carbon accounng soware.
BASA Bullen Issue 10114Chemique Adhesives launches new updated websiteAer months of preparaon, Chemique Adhesives, a UK manufacturer of industrial adhesives and applicaon equipment, has recently launched a new, updated website aimed at enhancing user experience and simplifying the process of nding the ideal adhesive for specic applicaon needs.The all-encompassing website now includes a fresh, updated design with user-friendly navigaon which allows visitors to the site to easily browse through dierent menus and view specic pages such as industries, brands, engineering services, latest news, blog posts, case studies and literature downloads.“We’re really excited about the launch of the new website.” commented Jennie Mayou, Markeng Execuve at Chemique Adhesives & Sealants Ltd. “The aim of the updated website was to create a plaorm that would cater to the needs of our diverse customer base whilst sll providing relevant and informave content. The fresh design and simplied site navigaon ensures that a user can gain a beer understanding of our comprehensive product range and discover an adhesive soluon for their specic requirements.”The new website also includes a number of new features including industry specic pages and recommended applicaon equipment that will help a user to make informed decisions about their adhesive needs.To visit the new website, please click on the link below: www.chemiqueadhesives.comChemique Adhesives announces latest expansion newsFollowing connued year-on-year growth, Chemique Adhesives, a UK manufacturer of industrial adhesives and supplier of adhesive applicaon equipment, has implemented its expansion plan and moved into a new 1200m2 facility. The new unit is being ulised for raw material and nished goods storage, and extra racking has also been installed, creang over 700 pallet spaces.The new storage facility has allowed for addional space to be created in producon areas, where newly purchased state-of-the-art mixers have been installed, leading to an increase in manufacturing output.The new mixers will enable the producon of new and toll-manufactured products ranging from lled 1K and 2K PU, structural PU, hot melt, epoxy, and various water-based formulaons.The expansion has also included a new QC laboratory, along with the upgrading of fume and powder extracon systems in producon and laboratory areas.Simon Cashmore, operaons manager at Chemique Adhesives, commented, “We have made a signicant investment in new equipment, and the expansion of our premises demonstrates our commitment to growth and our dedicaon to providing quality products for our valued customers. Following the approval of planning permission, a proposal is already in place for 2024 to source more equipment and increase our bulk storage capacity further, improving eciencies, reducing various waste streams, and increasing producvity.”
15 BASA Bullen Issue 101 BASA Bullen Issue 101Beardow Adams develops new eco-friendly, semi-pressure sensive labelling adhesiveBeardow Adams has developed a new adhesive for labelling, that supports the move towards greater sustainability in the packaging and labelling sectors. The new adhesive, BAM 2537, allows returned boles to be washed in a causc soluon, separang them from their labels, as well as the adhesive, before being returned to the market. This reuse loop can take place between ten to een mes, before the bole is fully recycled – drascally, helping to reduce the number of single-use plascs in use today. The innovave semi-pressure sensive formulaon, BAM 2537 works on all types of containers, but especially with highly carbonated boles as it provides a more aggressive bond, resistant of the stresses caused by the expansion of PET boles under pressure. Its residual tack also allows labels to be pressed back into the desired posion should the label peel away, sasfying both, manufacturers who need to protect their brands, and end-users who benet. The adhesive is suitable for low- and high-speed running machines (an average of 26,000 boles per hour), and easily produces the required adhesion between PET-label and PET-bole. Fully aligned with the growing introducon of deposit return schemes, BAM 2537 is approved by circular economy bodies, Returpack and PETCycle, and forms part of an eco-friendly range of adhesives from Beardow Adams that also includes bio-based, vegan friendly, and pallet stabilisaon adhesives. BAM 2537 is also FDA approved, allowing it to be used in the manufacturing of food and drink labelling and packaging. If you would like more informaon regarding our semi pressure sensive labelling adhesive, please contact: markeng@beardowadams.com Grolman Group Receives Ecovadis PlanumDemonstrating Strong Commitment to SustainabilityThe Grolman Group is honoured to announce a significant achievement – the attainment of a Platinum rating from EcoVadis, reflecting its unwavering commitment to sustainable practises. This award places the Grolman Group in the top 1% of companies committed to environmental and social responsibility.The company’s vision, "We want to sell chemicals to save the planet"," is validated by EcoVadis' Platinum rating. This recognition underlines the company's progress in implementing this principle.Florian Grolman, CEO of the Grolman Group, explains: “The path to this remarkable achievement was marked by conscientious efforts. From transparent reporting to active stakeholder engagement to implementing sustainable practises in the supply chain, every step has contributed to this milestone.Our success also speaks to the dedication of our team. The commendable efforts of all stakeholders and especially our CLIMATE team have contributed significantly to this achievement. The platinum rating from EcoVadis is both an endorsement and an inspiration for our continued commitment to sustainability."www.grolman.earth
BASA Bullen Issue 10116If I arrived on the earth from another planet and knew nothing of Covid, Trump, Truss, Sturgeon, Boris or Pun whilst considering the macroeconomic data for the G7, I would be close to certain that the G7 would be in recession in 2024.But I have been around a long me, and seen the economic events of recent years. All is not as it seems. In this update I will try to explain what the data is telling us, and give an opinion on the likely outcomes.We begin with the dierence between monetary policy and scal policy. Monetary policy is seng interest rates to inuence the behaviour of commercial banks and their customers. Interest rates are raised to reduce the demand for loans, and hence the growth rate in the money supply.Lower growth in money supply primarily aects the price of real estate in all its forms, which, if falling, hits household condence, and those with mortgages who nd upon renewal that their discreonary income is signicantly reduced.Fiscal policy is primarily changing tax rates and Government spending to redistribute income from those in work, to those rered. And to fund infrastructure, health, defence and educaon. And, exceponally, to support employment and business owners during a pandemic.The problem is that scal and monetary policy are not independent of each other. During Covid, there was a massive expansion in Government debt, all of which was nanced by the central bank. So Covid drove both expansionary scal and monetary policy.The expansion was $17 trillion globally, of which $900 bn was in the UK. The inevitable result has been a surge in average price levels of everything, including land, buildings, labour, materials, food, energy, IP, equies.However, G7 Governments are currently expecng their central banks to bring inaon down, whilst scal policy sll remains expansionary. Fiscal policy is expansionary if Governments are running budget decits.JUNE 2023 1ECONOMIC UPDATE JUNE 2023Currently, the UK Government is spending £45bn more than its income from taxes. The USA is spending $1.5 trillion more. And their central banks are raising interest rates because excess demand is causing inaon.So Government has its foot on the scal accelerator while the central banks are on the monetary brake. No wonder there are mixed signals from business owners and their customers.Imagine you are driving a car, you have your foot on the accelerator; your passenger their foot on the brake………how fast forward will the car go, if at all?If the UK Government seriously wanted inaon back to 2% asap, they would raise income tax by 5p, create a recession and prices (aer a me lag) would stop rising (except for imported products). Or cut Government expenditure by up to £45bn. Neither of these acons is, of course, polically acceptable. So we are le with the hope that higher interest rates will do the job without causing a recession.The core U.K. problem is a lack of producve capacity. The output gap is an esmate of how much spare capacity there is in the economy. It’s currently esmated at 0.1% of GDP. This means that, overall, the UK has virtually no spare capacity.Forecast UK output gap 2017 – 2023
17 BASA Bullen Issue 101 BASA Bullen Issue 101Up unl 2008, the average real growth rate for the UK was 2.3%; between 2008 and 2016 it was 1.3%; since 2016 it has been 1.1%Our producve capacity has barely grown since 2016, due to a collapse in investment, plus demographics.The key queson is - can the UK grow faster than 1.1% per annum without inaon running above 2%?The answer is no.This is why. If Governments are serious about taking inaon back to 2% as soon as possible, they must reduce demand. We cannot ‘magic up’ more labour supply. Invesng in capacity creaon takes me and simultaneously increases the demand for labour, which isn’t available.A recession would drive out zombie businesses, creang more resource for others. We know this is not current Government Policy. So all the emphasis is placed on Monetary Policy. Currently money supply is growing at 3.2%. This could, in theory, nance 1% real growth and 2% inaon by the end of next year. And this is in line with the belief of many forecasters.So there is no need to raise interest rates beyond the current 5% unless wage awards sll run in excess of 5%. However, regular pay in the rst part of this year was up 7.2%. UK producvity is currently esmated at 1.3%. So arithmecally, we are looking at core inaon running at 5-6%. Therefore the 2% inaon rate target is unrealisc.Next year, real GDP could be minus 2% or plus 1%. I expect plus 1%. Why? Because although new money is running at 3.2%, we sll have Covid support money in the system. Around 125Bn. This would be sucient to nance 5% inaon, plus 1% real growth, even if money supply fell back to 2% growth.If Government presses the B of E to hit the target of 2%, I can see 6% base rate and a 2 year recession. Bluntly, we need unemployment to be around 7% to ensure employers can pick from a stock rather than poach from others. Even then, there will sll be wage inaon in Fintech, IT, and high-end engineering.Over the next ten years our home grown labour supply will manage to expand by about 200,000 a year. This year it will grow by 500,000.Unless there is signicant immigraon, our growth rate can only exceed 1.1% if every business has a mission to automate, and implements it quickly. This is eecvely ‘needs must’.AI AND AUTOMATIONHow good is AI? Can it deliver the required producvity gains? I used Chat GPT to summarise our discussion so far. I cannot nd fault with it.It is important to note that while governments can inuence inaon, there are also external factors such as global economic condions, commodity prices, and market expectaons that can aect inaonary trends. Therefore, controlling inaon is oen a complex task that requires a combinaon of prudent monetary, scal, and supply-side policies.AI is a supply side component and so I asked Chat GPT to give an overview of supply side technologies. This is its response: As of my knowledge cuto in September 2021, here are some of the latest producvity-enhancing technologies that were gaining tracon:1. Arcial Intelligence (AI) and Machine Learning (ML): AI and ML technologies are being applied to various areas to automate tasks, opmize processes, and provide intelligent insights. They can assist with data analysis, customer service automaon, predicve analycs, and more.2. Roboc Process Automaon (RPA): RPA involves using soware robots to automate repeve and rule-based tasks. It can signicantly reduce manual eort and increase eciency in areas such as data entry, invoice processing, and HR onboarding.JUNE 2023 2
BASA Bullen Issue 10118The degree of existenal risk posed by AI has been hotly debated. Experts are divided. In a survey of AI researchers carried out in 2022, 48% thought there was at least a 10% chance that AI’s impact would be “extremely bad” (e.g., human exncon). But 25% said the risk was 0%; the median response put the risk at 5%. The nightmare scenario is that an advanced AI causes harm on a massive scale, by creang poisons or viruses, or persuading humans to commit terrorist acts. It need not have evil intent: researchers worry that future AI may have goals that do not align with those of their human creators.My opinion is that AI is the soluon to the labour supply shortage in the Western World. It will enable producvity growth, and thus expand the tax base which will be required to support health and wellbeing of the aged.THE USAInaon is now 4% Wages are growing by 4.3%, so real incomes are improving. Base rate is 5.25%, so the real cost of money is posive, unlike in the UK, where the real cost of money, based on base rate, is around minus 4%. All US mortgages are xed for at least 10 years and most are xed for 30 years. So higher current interest rates only aect new mortgages. The US property market is less vulnerable to rate changes compared to the UK.Even so, in the UK since 2014, any borrower would have shown they could maintain their lifestyles if rates rose by up to 3%. The 3% has been breached in the past two months.Money supply growth is minus 5%, primarily due to the Fed’s unwinding QE. Bank lending is growing by 1%. This data suggest the USA will slow, but thanks to the big federal decit, the USA will avoid recession.THE EUThe Euro area inaon rate is 7%, base rate 3.75% so, as in the UK, the real rate of interest is sll negave, and with wage growth at 4.4%, real wages are falling. The data suggests that in the last quarter of 2022 and rst quarter of this year, the Eurozone shrank by 0.1%. Which, frankly, is neither here nor there, and well within accepted stascal error.THE OUTLOOK FOR INFLATION In the past 12 months, energy prices have fallen by 33% (oil); 60% (gas). Food commodies are around 33% higher, except for wheat which is down a third. Metals, except iron ore, are sll rising. But steel is back to pre-Covid prices.3. Internet of Things (IoT): IoT enables the connecon of physical devices to the internet, allowing data collecon, monitoring, and automaon. This technology has applicaons in smart homes, industrial automaon, asset tracking, and energy management, among others.4. Cloud Compung: Cloud compung oers scalable and on-demand access to compung resources, eliminang the need for on-premises infrastructure. It enables organizaons to store, process, and access data and applicaons more eciently, leading to increased collaboraon and producvity.5. Collaboraon Tools and Project Management Soware: There are numerous tools and soware available that facilitate team collaboraon and project management. These plaorms enable remote work, real-me communicaon, task tracking, document sharing, and seamless coordinaon among team members. Virtual and Augmented Reality (VR/AR): VR and AR technologies are being ulised in various industries to enhance producvity. They provide immersive training experiences, virtual meengs, remote assistance, and interacve visualisaon for design and simulaons.6. Wearable Technology: Wearable devices, such as smartwatches and tness trackers, can help individuals monitor their health and acvity levels, manage schedules, receive nocaons, and access informaon on the go. These devices can contribute to improved personal producvity.7. Automaon and Robocs: Industrial automaon and robocs connue to advance, streamlining manufacturing and logiscs processes. Automated systems and roboc machinery can handle repeve tasks, leading to increased producvity and precision.Please note that technological advancements are connually evolving, and new producvity-enhancing technologies may have emerged since my knowledge cuto in September 2021.This is a good example of how AI has increased my producvity. I would normally spend the best part of a day scanning the web for the data in italics. It took 3 mins.We know that since 2021 further advances have been made in automaon of health care, drug design and back oce processes. Proponents of AI argue for its potenal to solve big problems by developing new drugs, designing new materials to help ght climate change, or untangling the complexies of fusion power. To others, the fact that AI’s capabilies are already outrunning their creators’ understanding, risks bringing to life the science-con disaster scenario of the machine that outsmarts its inventor, oen with fatal consequences.JUNE 2023 3State pension spending is expected to rise by a third over the next ve years
19 BASA Bullen Issue 101 BASA Bullen Issue 101JUNE 2023 4THE PROPERTY MARKETMonetary policy is concerned with using interest rates to inuence the supply and demand for money. Currently, the supply of money growth rate has dropped to 3.2% yoy. This is because both the demand for, and the supply of, mortgages has soened, and banks are more cauous about lending to business.In the literature on the impact of higher interest rates, economists talk of inaonary expectaons and argue that rising interest rates and expectaons of further increases should moderate wage demands. In a ght labour market, the opposite seems to happen. Employees, parcularly if changing jobs, will demand higher wages to cover their mortgages, and desperate employers pay up. The increase is then put on their selling price, thus maintaining, rather than reducing inaon. All the evidence suggests that inaonary wage demands only moderate when the supply of jobs falls – e.g. a sharp reducon in order books. Can higher interest rates deliver a slowdown, or worse, a recession? The so called money transmission mechanism is much debated but the consensus is that it primarily works via the housing market.The thinking is this: Most Brits hold their wealth in their primary residence. It gives them a place to live and a tax free capital gain. Ever-rising house prices increases perceived wealth and condence that the country is doing well. There is evidence that if property prices are increasing, consumer condence moves in line and spending ows. And this can work in reverse, it did in the early ninees Inaon in 1990 was just under 10%, base rate was 14%, so typical mortgage was 16%; wages were growing by 10.6%. Unemployment was 5.6%. House prices were falling by 1.5%By 1992, unemployment was 10%, base rate hit 15% and the UK le the ERM. Inaon was 3.2%. House prices were at. having dropped 18% in two years.Labour produces output. The share of the added value it creates is shown in this chart.Taking the naon as a whole, those who do the work get around 60% of the value created. The owners - i.e shareholders and landlords, get 40%. Demographics in the U.K. is a driver of this shi.By denion, those who are rered are living o rents and Government tax transfers from those working. By denion, anyone on state benets is living o the work of others.The UK needs more producers and fewer recipients of money from the eorts of others.HOW TO DO THIS?Raise the rerement age, cut state benets to the bare minimum for survival. Increase taxaon on capital gains, including on property.The polics of this distribuon is - Labour would like to increase the worker %; Conservaves the shareholders/landlord %.Since the eighes there has been a shi in the U.K. We have an increasing number who live o the ownership of assets, and a reducing number of those who live by producing.In other words there are more inhabitants of working age choosing to receive income from having property and shares rather than from producing. To grow an economy we need more doers and fewer ‘owners’.This will require a signicant societal shi which I do not think will happen. That is, unl the reners no longer can survive on the income from owning, and then have to start doing!The fact that 100k of the 600k early rerees are back producing may be just the beginning.Historical Steel Price Movement
BASA Bullen Issue 10120JUNE 2023 5Many journalists are suggesng that there will be a repeat of the early ninees. However they have missed a key component.The collapse in prices in 1990-92 was primarily because Nat West and Barclays were insolvent and calling in loans, pushing rms out of business and repossessing 300,000 homes, which they dumped onto the market, willing to accept any price, so long as it covered the debt.A headline last week trumpeted repossessions up 50% in Q1. The number 750.I strongly believe that we will not see a repeat of the ninees.Firstly, UK banks are well capitalised, they have enough capital to cover delinquent borrowers without repossession. So there will be no aucons of repossessed properes to depress average prices.Secondly, the labour market is much ghter that in the early ninees and any increase in unemployment will not push it above 5%Thirdly, average earnings are up 7.2%, and will sll be rising by 5% at year end. Fourthly, energy bills will be lower than expected in the autumnFihly, there is sll 125Bn of excess deposits in the bank of Mum and DadMost importantly, 80% of mortgages are joint. So presumably two incomes, both of which are likely to be going up 5-10%, depending on job and locaon. 8.8 million were earning at least £52,000pa in 2022. 9 million households – just 30% - have a mortgage. At the end of 2022, the monthly average mortgage payment was £2000 per month. By the end of this year it will be around £2300 a month. The average mortgage is 185k.In the rst quarter of 2023, only 38% of house purchase was debt, the rest cash. Pre-Covid, the gure was 47%. We know that for the 1.6 million who will have to renew over the next 12 months, it will be a challenge as they shi from 2% to 6-8%. We also know that 95% mortgages are dicult to obtain.THE BIG QUESTION IS WILL THE MARKET CRASH? My judgement is it will not. Average real prices have actually fallen by 12% since the post covid peak. We can expect a further fall of 9%. Prices moved up unl May, and now are at (this is normal in the selling cycle). Journalists are fond of comparing prices to the previous peak, which was last August, and they are currently 3.7% below that. In nominal terms, on average, I expect prices to reduce by 3% by the end of this year.Transacons peaked in March and fell to 82,000 in April. I guess year-end we will see a gure of 850,000 for the year, 23% below the norm.Given that we sll expect to run at full employment, that average wages will increase by 5% and that the Bank of Mum and Dad sll have considerable funds, I do not expect a repeat of the early ninees, or 2008-12.In fact, because the UK has a structural housing shortage, for every person unwilling or unable to buy, there will be someone who can, and will, buy.Will the 1.6 million faced with much higher outgoings on mortgage nance create a recession?The answer is no. I suspect any supplier to middle market consumers will experience some impact. I guess skiing, long distance holidays and possibly larger SUV demand might soen, but not by much.
21 BASA Bullen Issue 101 BASA Bullen Issue 101More than 80% of UK economic acvity and hence employment is in the service sector.The chart below shows the UK wage price spiral at work. Ideally, this spiral would be broken by the wholesale applicaon of AI to raise service sector producvity, whilst simultaneously reducing the overall demand for people. But this will take a number of years. If the Government is serious about geng inaon down to 2%, we will have to have a recession to reduce the demand for services, and aer a year, rising unemployment should break the wage price spiral.The only way to do it is hit the pockets of those earning over 50K pa by reducing allowances to zero. But the majority of these will be tory voters so it will not happen.Current policy appears to be as follows: Tell the B of E to raise rates, blame them for the ensuing property crash, falling asset prices increase precauonary savings, so demand for services decreases, and with a me lag of 18 months, the wage bargaining climate shis in favour of employers.In the middle of all this, a general elecon has to be called.THE EXCHANGE RATEAs I write this $1.27 is the rate which I forecast at the end of the year. Its noceable that the forex markets didn’t move following the 5% interest rate announcement. They had already priced it in.If the rate moves towards $1.33-35 over the next three months, it strongly suggests that the markets think the Bank will raise base rate beyond 5%. Who knows!The Euro rate is 1.17 and I doubt if it will go beyond 1.18 this year.JUNE 2023 6CONCLUSIONSThe UK non-inaonary real growth rate is 1.1% unl producvity improves. The Bank of England will keep interest rates around 5%, unl inaon falls to 3%. This is unlikely to be achieved for a number of years because labour shortages will ensure wage compeon and poaching.The ‘normal’ rate of interest is real GDP growth rate, plus 2.5%. So 3.5% is the lowest we will see in the future.Any growth above 1.1% will require signicant labour substung investment, using AI.This investment would have taken place since 2016 but for Brexit. It’s now an imperave, even though the cost of capital has increased. To repeat, the demographics show labour supply barely growing over the next ten yearsThe demise of zombie businesses will release some capacity, but connuing labour shortage will keep wage growth around 5%The housing market will not collapse unless base rate goes above 5%Lower than expected energy bills in the autumn will give some relief, and support consumer spending before Christmas.Number of UK properes repossessed Years of rising house prices have provided an equity cushionNumber of UK properes repossessed
BASA Bullen Issue 10122JUNE 2023 7Roger is a graduate of the University of Leicester. He has worked in the New Zealand Treasury, at the Bank of England and, for many years, was Client Director at Henley Management College where he worked with a wide range of businesses. He is a behavioural economist who believes that economic forecasng is an art, not a science and that it is crucial to esmate the nature, size and impact of ‘animal spirits’ when looking forwards. He believes that Government cannot control the economy; it can only inuence the behaviour of economic agents. He was one of the few who forecast the depth of the recent recession based on his ancipaon of the behaviour of the banking system. He thinks it is beer to be broadly right than precisely wrong when forecasng the future!Roger Martin-FaggAt last the B of E is adming what some of us have known for years. Their model has a poor record of forecasng inaon because it doesn’t include equaons which properly reect the impact of money supply on acvity. And the MPC commiee members are well respected academics who have lile or no understanding how a business works.If I was in charge, I would ensure 6 out of the 8 MPC members were SME owners. I would have a food producer, (not an importer), a manufacturer, a logiscs company, a construcon company, an AI creator, and a training/educaon business. Only two of them would be from London and the SE.I think the real economy will sll manage to avoid recession. We will experience stagaon. A period of very low, or no growth, with persistent domescally-generated price pressures.The next 18 months is very dicult to forecast accurately. Primarily because human behaviour is volale and strongly inuenced by the media, which has already started to tout the R word. Rishi Sunak is perhaps hoping that media misery will cause households to reduce their non-essenal spend, increase their just-in-case saving, and reduce demand. Thus reducing wage inaon via soer demand for employees.The only advice I can oer to a business owner is: look at all your processes and ruthlessly search for eciencies to reduce your demand for scarce and expensive employees. The next 10 years will be labour-shortage years. Businesses which invest heavily in process re-engineering will reap considerable benets. We all know the biggest obstacle is the human resistance to change, especially when current performance appears to be ok. It there was ever a me for inspiring leadership, it’s now.Prepared June 23 2023Rmfagg@aol.com