PwC in Scotland

Falling fuel prices push down April inflation

PwC — Tue, 21 May 2013 14:52:00 +0100

April’s lower than expected inflation rate is the first dip in UK inflation since September 2012, according to today’s data from the Office for National Statistics (ONS).

Inflation, as measured by the consumer price index (CPI), fell to 2.4% in April from 2.8% in March, with around half of the fall attributable to lower fuel prices.

Declining air fares were the other major contributor to the decline.

Between March and April, average petrol and diesel prices fell by 2.1p and 3.9p a litre respectively, however the ONS said that food prices continued to rise due to reduced crop production resulting from prolonged bad weather.

Average food prices have now risen by 40% since 2007, as successive years of bad weather hit farming and crop yields, the ONS said.

Commenting on today’s UK inflation figures Dr Esmond Birnie, PwC chief economist in Scotland said:

"This latest drop in the inflation rate is more than most observers expected, but its welcome nonetheless as it relieves some of the squeeze consumers have experienced between rising prices and falling incomes.

“With wages having increased at less than half the rate of inflation for almost five years, any slowdown in inflation is welcome.

“However airfares and fuel prices, which contribute to April’s decline, are among the more volatile components of inflation and these could easily reverse.

“That means the drop we have seen in April may not be sustained, so we cannot assume that inflation is on a steady decline towards the Bank of England’s 2% target and regrettably we could see inflation moving upwards again over the summer.”

ends

Businesses urged to tackle disaster risk reduction in new UN / PwC led initiative

PwC — Mon, 20 May 2013 12:29:06 +0100

UN Global Platform for Disaster Risk Reduction (19-23 May)
PwC / UNISDR report warns that business growth in hazard-prone parts of the world is leaving the private sector more exposed to disaster risk
New business initiative responds to the UN’s call for more action from the private sector on disaster reduction

A new report by the UN International Strategy for Disaster Reduction (UNISDR) and PwC warns that large multinationals’ dependencies on international supply chains, infrastructure and markets poses a systemic risk to ‘business as usual’.

The findings come after a separate report, the UN’s Global Assessment of Risk (GAR13) report warned that direct losses from floods, earthquakes and drought were under-estimated by at least 50%. The GAR13 warned that business needed to act to protect itself better, as mounting losses this century from catastrophic events top $2.5 trillion and economic losses were described as ‘out of control.’

The UNISDR/PwC report Working together to reduce disaster risk examined disaster risk management approaches and experiences in 14 leading global businesses, including Nestle, Walmart, General Electric, Citigroup and BG Group. It was launched to mark a new initiative led by UNISDR and PwC to link private sector businesses of all sizes in disaster planning.

Businesses taking part in the report undertook a pilot assessment of their risk management activities which showed that while good practices existed for disaster risk reduction for corporate-owned assets, the level of understanding and ability to manage risks in local supply chains was far lower.

The private sector has witnessed increasing numbers of occasions of indirect impacts of natural disasters amplifying losses globally through commodity price rises, supply chain disruption, workforce dislocation, asset damage, and lost or damaged infrastructure. The report highlights how:

Even businesses with established risk management systems in place need to do more to protect themselves fully against natural disasters;
Small more vulnerable enterprises in developing economies, do not have the capacity to strengthen their risk management and overall supply chain resilience alone;
Global businesses need to consider shared risks with suppliers, SMEs and local businesses in their supply chain, particularly in developing and emerging economies, where disproportionate economic and human impacts of disasters are being felt;
Few global corporations collaborate actively with governments across countries in which they operate
Some large businesses rely on the insurance industry alone for risk assessments, with most having only limited access to disaster risk information on which to base investment decisions.

Oz Ozturk, PwC partner and leader of the global initiative, said:

“The risks posed by natural disasters go well beyond the boundaries of a company’s operations. The damaging effects of disasters are reaching beyond protection insurance covering physical assets, and businesses need to consider productivity, declining customer demand and goodwill, and employee morale and stress.

“The businesses we interviewed understand they need to do more than just do business in the communities they are working in. Collaborating on disaster risk management is a strong platform on which to create local partnership with governments and cities, and demonstrates that business is having a full and positive impact on society.”

The new initiative, facilitates the involvement of private and public sector organisations of all sizes and in all sectors, to take steps on disaster risk reduction, offering an assessment tool to help companies identify where their companies’ plans stand, and where gaps exist in the management of disaster risk.

Margareta Wahlstrom, UN Special Representative of the Secretary-General for Disaster Risk Reduction said:

“While many private sector players are demonstrating an improved understanding of how their operations could be affected by natural hazards, there is a huge need for businesses worldwide to play a more central role in reducing disaster risk. The economic losses speak for themselves.

“The other side of the equation is that disaster risk management is a business opportunity. For example, the development of new crop insurance products or more disaster resilient infrastructure are major emerging needs in response to extreme weather events, rapid urbanization and growing exposure to disaster risk.

“This is ultimately about improving safety for all, and the security of supply chains and economic growth, and this initiative will provide a common platform for understanding disaster risk management in the private sector across businesses of all sizes, in any industry or sector.”

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A tale of two businesses - a view on complexity

PwC — Fri, 17 May 2013 15:57:56 +0100

Removing complexity creates an organisation that’s agile and can respond efficiently and effectively to market changes. They also know how their people, processes and systems add value to customers and the business. This can be challenging to get right, but the benefits are significant and will ultimately lead to improved business resilience and growth that outstrips the market.

In the brief introductory video below - 'A tale of two businesses' -we show how addressing the complexity issue, will improve the performance of your operations, reduce your costs and give your customers a better experience.

This creates a real opportunity to deliver business value and set you on course for a platform for growth.

The Future of UK GAAP - Scotland Seminars

PwC — Thu, 09 May 2013 16:02:09 +0100

Financial reporting is continually changing. But for UK GAAP reporters it’s changing in a big way, with a new accounting framework to consider.

The Accounting Council of the FRC recently published their long-awaited replacement for UK GAAP - FRS 102 - which will come into effect from 1 January 2015, impacting many Scottish businesses.

Now is the time to plan ahead.

With choices ranging from full IFRS to FRS 101 and FRSSE to FRS 102, it is important to interpret the differences with UK GAAP and assess the impact on your business.

We're holding seminars in Glasgow, Edinburgh and Aberdeen at the end of May to help you prepare for these changes. As well as discussing the choices open to UK companies, we'll also look at the issues your business will need to consider when moving to a new framework.

Details for the seminars are below:

Glasgow: 28 May 2013 8.30am-10.30am

Edinburgh: 28 May 2013 3pm-5pm

Aberdeen 29 May 2013 8.30am-10.30am (this seminar is now full)

To register for the 'new UK GAAP' seminar, please email scotland.events@uk.pwc.com, confirming your details.

The Queen's Speech - an eye to the next election

PwC — Wed, 08 May 2013 16:48:46 +0100

Nick Jones, Global Director of PwC’s Public Sector Research Centre

Today's Queen’s Speech, the quaint tradition by which the government of the day sets out its annual legislative programme amid much pomp and no little ceremony, contained few surprises.

Nevertheless, it was still of real interest in showing the direction of travel for the remainder of this Parliament, combining some necessary long term welfare reforms alongside more populist proposals - clearly with the next Election very much in mind.

Following on from the Coalition’s Mid Term Review, which we covered on our PwC Public Sector blog, the focus for the next 12 months was always going to be on the welfare agenda - with two landmark reforms on pensions and social care included.

The introduction of a single tier, flat rate weekly pension has long been trailed while the social care bill marks a milestone in the long period of debate and wrangling on the funding of social care costs (enacting the principles of, if not the actual level of cap requested by, the Dilnot Commission).

The focus on pensions and social care is unsurprising, given the rapid ageing of the population (see Figure below) and that support to the elderly and the vulnerable form a significant part of the third of public spending that is spent annually on benefits.

Figure: Proportion of 75+ relative to total population in England

But also of interest to those watching for signals as to the forthcoming Spending Review, there is no planned legislation on the requirement to spend 0.7% of Gross National Income on aid.

There were also a few lower profile proposals which play to the growth agenda including legislation to cut business costs including NICs on new employees for small employers, further de-regulation and steps to support apprenticeships and traineeships (see here for our contribution to this agenda).

A paving bill for HS2 will also allow preparatory work to be done, although we are still many years away from actual construction, a real impact on jobs and the hoped for boost to productive potential.

Politically, strengthening immigration laws is a clear indication of the continuing attempt by the Conservatives to counter the UKIP surge, while the plan to legislate for a transferable tax allowance for married couples is, again, intended for the heartland Tory voters. And the LibDems can also claim measures proposed in the Queen’s Speech form a ‘radical social reform’ agenda.

However, this legislative programme forms the important backdrop for the forthcoming Spending Review where all eyes will again focus on deficit reduction and the implications for growth and the funding of public service provision. It is the Coalition’s performance on achieving good growth, particularly in our cities which are the engine of sustainable growth, together with jobs for the young and controlling the cost of living which will ultimately hold the keys to success or failure at the next Election.

In advance of the Spending Review, PwC will provide regular updates and analysis on the developments to date, the economic environment, and key decisions to be made. Keep up to date at @pwc_ukgov