Osborne’s cuts challenged by Oxford consultancy

first_imgOxford Economics, an Oxford-based consultancy, has challenged the coalition government’s commitment to implementing spending cuts. The consultancy firm reported that the government budget deficit will fall naturally at a much faster rate than initially predicted, reducing the need for the austerity package.The report focused on the output gap: the difference between Britain’s actual GDP and potential GDP. While the output gap was believed to be 1.8 per cent of GDP, Oxford Economics has estimated that it is in fact over twice as large, at 5 per cent. A larger output gap means more potential for economic growth.The report comes just weeks after the chancellor George Osborne warned that another £25bn of spending cuts needed to be made after 2015. If true, the report would invalidate Mr Osborne’s arguments for the need to make further spending reductions.Students remain divided on the issue of spending cuts. Jack Matthews commented in his capacity as OUCA President that, “Dealing with the deficit and debt is the only way to return Britain to a strong economy. For the benefit of hardworking people everywhere, it is crucial that the government stick to their long-term economic plan.”OULC Co-Chair Dan Turner responded, “Since the general election it has been clear that the government has been motivated by an antiquated and destructive ideology. By pushing for premature and severe cuts to capital spending, they caused an avoidable double-dip recession.”Andrew Goodwin, senior economist at Oxford Economics and co-author of the IFS report, said, “The medicine of austerity could end up being applied in a dose higher than the patient actually needs.”It is also possible that the output gap doesn’t imply anything about the level of spending cuts needed. Dr Ian Jewitt, an Economics fellow at Nuffield College, stated, “Whether they are right or wrong about the output gap, I’d have thought that issue was second order of importance for the necessity of cuts […] what happens to the world economy will be more important than the output gap.”Dr Jewitt pointed out that other factors such as the Eurozone turmoil are crucial in determining British economic growth, and as such we cannot expect higher growth simply because there is an output gap.One PPE finalist told Cherwell, “Everyone knows no one knows anything about macroeconomics. We just have to pretend that we do.”last_img read more

The future for free-from

first_imgThe free-from bakery sector has undergone a massive transition in recent years, from producing only long-life breads which have to be refreshed, to the launch of the first fresh gluten-free bread on the market this year. Recent data from TNS Worldpanel into free-from bread, ambient cakes and pastries and morning goods (for the 52 w/e 4 October 2009), reveals that the volume and value of bread sales have shot up by nearly 50% (see free-from bakery market tables). Ambient cakes and pastries have seen a steady growth in value, but a slight decline in volume, while morning goods have seen a small decline in both volume and value.Paddy Cronin, sales and marketing director for Finsbury Foods’ free-from division, says the firm has seen significant volume growth for bread. Finsbury’s free-from division is split between two businesses United Central Bakeries (UCB) and Livwell. UCB, based in Edinburgh, produces a range of flatbreads, morning goods, cake products and the Genius loaf, which won this year’s Asda-sponsored Innovation Award at the Baking Industry Awards. Livwell, based in Hull, produces mainly bread and rolls, but also speciality products, such as ciabatta rolls, focaccias, croissants and pains au chocolat.Market set to surgeCronin believes that the gluten-free bread market could be worth as much as £14m by May 2010, almost double its value compared to May 2009, according to figures from Nielsen, which placed it at a current value of around £8m. He believes much of this growth has been stimulated by the Genius brand, a fresh branded loaf, launched in May this year, which was developed in conjunction with chef Lucinda Bruce-Gardyne. “It has a rate of sale, particularly in Tesco, that outperforms some standard bread lines,” he says. “The reason it’s done so well is that standard gluten-free bread has always had to be refreshed or toasted, but this is the first fresh free-from bread on the market that doesn’t.”Cronin says the morning goods category has remained “pretty flat”, although he says there is a lot of work going on in that area. “Morning goods had been showing growth of around 30% year-on-year (YOY), but it has fallen back now as the bar has been extended, with expectations of quality and delivery of products higher than before. Cake has been seeing around 8-10% growth YOY, and that’s mainly down to new products,” he adds.Companies looking to break into the free-from market include Delice de France, which recently started distributing gluten-free sandwich bread and two muffins blueberry and chocolate chip. The products, developed by Fayrefield Foodtec, were launched in response to the increasing number of consumers eating gluten-free products for lifestyle reasons, rather than due to gluten intolerance. Fayrefield Foodtec’s sales and marketing director Steve Timms says the firm has had an increasing number of companies approaching them with an interest in launching gluten-free products. He adds: “The focus on the health angle is still very much there.”According to the National Institute for Health and Clinical Excellence, coeliac disease is believed to be present in up to one in 100 of the population, although only about 1015% of people with the condition are clinically diagnosed. Cronin agrees that it’s not only people with coeliac disease who choose to eat free-from bakery. He says Finsbury has identified three categories of consumers: the must-dos a group essentially made up of coeliacs; the like-tos consumers who like to buy free-from products from time to time; and the should-dos consumers who are not fully aware of the benefits of avoiding wheat and gluten, for example people with irritable bowel syndrome.”Through market research we have also identified that these three groups account for around 15% of the UK population, whereas around 1% of the population is believed to have coeliac disease,” explains Cronin. “It would be difficult to sustain a whole market on just 1%, but in reality these products appeal to a wider market.”Commenting on where the market is heading, Cronin says it will be focused on creating more fresher products, which are as close to their standard variety as they can be. He has spent a lot of time speaking to coeliacs in England and Scotland, and found that the main issue around free-from bakery is that it doesn’t taste as good. Consumers have complained that the products are all long-life, and that taste is compromised, explains Cronin. Finsbury is also looking at the nutritional value of these products, for example sugar, salt and fat content, he adds.Looking at nutritionNutrition is also an area that Cumbria-based Bells of Lazonby is actively looking at. “Although a lot of work has gone into getting the flavour right, it’s possibly at the expense of good nutrition, explains MD Michael Bell. Producing free-from bakery products under the Village Bakery and OK Foods brands, Bell says he thinks one of the trends free-from producers will have to look at next, just as in the mainstream sector, is how to reduce salt, fat and sugar content in products. “Also one of the challenges in free-from is how to increase the fibre content of products; we need to look for ingredients that will help us achieve that.” He explains that sourcing raw materials is one of the greatest challenges in the free-from sector, as well as conforming to the new gluten-free legislation. Coming into effect on 1 January 2012, new EU regulations will mean food will have to contain less than 20 parts of gluten per million (ppm), in order to be labelled as ’gluten-free’ 10 times less than the previous limit of 200ppm. Businesses will be allowed to label products as ’very low gluten’ if they contain less than 100ppm.”The market is becoming more specialised and free-from buyers are buying more often. Our sales are going through the roof… and innovation and research and development has really helped drive our growth,” says Bell, adding that he predicts the overall value of the market will continue to grow, “albeit at a slower rate in the recession”.”We’ve got a number of new products we’re working on for a launch in January, which we are currently putting through taste-panels. It has always been our goal to create free-from products that are every bit as good as conventional products,” he explains. “Things have come on an awfully long way. However, the market has got to move on a step by producing good quality but also nutritional products.”An area where there is seen to be a gap in the free-from market is in the foodservice industry. Cronin says it’s an area Finsbury is “really working on now”, as it’s a big issue for the ’must-do’ category who find their choice very limited when it comes to purchasing food when they’re out and about.Norma McGough, head of diet and health at registered charity Coeliac UK, says that when it comes to buying a savoury meal or snack on-the-go, coeliacs often have to go without any carbohydrates, as products such as gluten-free sandwiches and wraps are rarely available, so there is a need to bridge this gap. Another issue, she says, is the nutritional composition of products. “There is still no legislation on the fortification of gluten-free flour with, for example, iron and calcium, which there is for wheat flour.” McGough acknowledges that huge developments have been made in the retail sector for free-from and, in particular, with the range of products available at supermarkets. However she says coeliacs are still keen to see more speciality breads and freshly baked goods on the shelves. “For bakers to be able to develop more fresh products is something we would really welcome.”last_img read more