September 2008

NEWS

UK’s global business rating improves still further
The Forbes ‘Best Countries for Business’ survey for 2008 has rated the UK fifth globally, in its third annual survey (formerly known as the ‘Forbes Capital Hospitality Index’). The UK gained five places to overall fifth from 2007, ahead of Germany, France, Spain and Italy – all of which fell in the rankings – but behind Denmark, Ireland, Finland and the US. The top ten was completed by Sweden, Canada, Singapore, Hong Kong and Estonia/Switzerland (joint 10th).

The ranking considered more than 120 countries and assessed factors such as investor protection, economic policies supportive of free trade and low inflation, corporate corruption, the right to participate in fair elections and degrees of personal freedoms, such as freedom of expression and organisation. To arrive at its conclusions, the survey drew on a number of well-respected sources, including the Heritage Foundation’s ‘Economic Freedom Index’, the World Economic Forum’s ‘Global Competitiveness Report’, the ‘Corruption Perceptions Index’ from Transparency International, the ‘Personal Freedom Index’ from Freedom House, Deloitte’s ‘World Tax Rates’, the World Bank’s ‘Doing Business’ and the Central Intelligence Agency’s ‘World Factbook’.

Denmark rose three places from last year, while Ireland leaped 19 places to number two. Finland was up four to third place, while the US slipped one place from third to fourth. Ireland, like other big movers – for example, Estonia, up 24 places to number 10 and Saudi Arabia, up 37 to 47, scored highly on the limited bureaucracy standing in the way of entrepreneurs. India (number 64, down 13) and China (number 79, down two) fell in this year’s rankings as political instability demonstrated resistance to increasing personal freedoms. Higher inflation from food and other commodity costs, as well as increased burdens on entrepreneurs, also held both countries back as business destinations, said Forbes. In developed nations such as Germany (number 21, down nine) and France (number 25, down nine), scandals in the banking sector and tougher barriers for entrepreneurs led to declines in the rankings.

The UK has become the leading destination for offshore acquisitions from India, according to new research from business adviser Grant Thornton. The company’s New India Watch research shows that Indian businesses are spending more on mergers and acquisitions in the UK than any other country. It cites major deals such as Tata Motors’ recent purchase of Jaguar and Rover, together with smaller deals such as the $92.5 million takeover of Hichens Harrison & Co, which have pushed the value of Indian acquisitions to some $2.8 billion. Anuj Chande, Head of Grant Thornton’s South Asia Group, attributes the UK’s success to a combination of historical links, a similar business ethos and cross-border business infrastructure. He said: “Indian businesses are looking primarily to buy brands and established distribution networks. If a UK brand with an international profile is looking for buyers, expect interest from acquisitive India companies.”

Grant Thornton also predicts that the number of Indian companies listed on the London Stock Exchange (LSE) is set to jump by 20 per cent. The firm was recently nominated as financial advisor for the Mortice Group, the first Indian facilities management firm to float on the LSE’s Alternative Investment Market (AIM). At least six more Indian companies are planning initial public offerings in London, mainly through AIM, says Grant Thornton, which believes that the UK’s greater access to international markets, wider investor base and general prestige are attractive factors to Indian firms. The stock value of the 23 India-focused companies on the AIM has risen to $5.9 billion, it says, with Great Eastern Energy Corporation stocks, for example, seeing a 126 per cent increase on a CAGR basis. AIM is the world’s leading small-cap growth market, with over 2,900 companies listing since it launched in 1995. In 2007, it accounted for 52 per cent of all IPOs on European stock exchanges.

Economy is ‘well placed’ to weather downturn
Britain is well placed to weather the economic downturn and avoid recession, according to the International Monetary Fund (IMF). The Washington-based institution has raised its estimate for UK growth in 2008 from 1.6 per cent to 1.8 per cent, while its 2009 projection has been increased by 0.1 per cent to 1.7 per cent. IMF economist Charles Collyns said: “The flow of data over the past month or so has been quite negative – especially the news on house prices, manufacturing, and consumer and business confidence. On the other hand, the hard data on activity, especially on consumption and employment, have shown considerable resilience. Overall, we do feel that the risks to the current forecast are to the downside.” A UK Treasury spokesperson commented: “As the IMF recently noted, the UK has strong policies and policy frameworks, which provide a strong foundation to weather global shocks,” adding that the UK economy remained strong and “well placed for the future”.

© BAE Systems

In the manufacturing sector, the fastest-growing segments currently are two longstanding stalwarts of UK industrial production: weapons, followed by bicycles and motorbikes, according to manufacturers’ organisation EEF. The study found that most of the companies in fast-growing sectors export a substantial part of their output, giving them the experience of coping with a range of different markets, while many also focus on niche areas where competition is relatively small. Average annual growth in manufacturing was 0.6 per cent a year over the five years to 2007, while average growth for the economy as a whole was 2.8 per cent, according to the report. The output of weapons – part of the broader military equipment industry – grew by an average of 12.4 per cent a year, the best of any manufacturing segment, while two-wheeled vehicles grew by 8.6 per cent a year on average. The former segment is led by companies such as BAE Systems, MBDA and BSA Guns, the latter by the Triumph motorcycle company and bicycle producer Pashley. Other top-performing sectors included aerospace and industrial control equipment, as well as less glamorous segments such as metal tubes, domestic appliances, fish processing and concrete construction products. Along with instruments and iron and steel production, all these sectors recorded growth of at least 4.3 per cent a year on average over the past five years, although most are relatively small in terms of overall output. The largest of the top 10 sectors in terms of output are aerospace, with 4.5 per cent of output, instruments (2.1 per cent) and concrete items (1.4 per cent). In 2007, manufacturing accounted for 13 per cent of the UK’s economic output and employed around 3.2m people.

Small businesses are set to receive tax credits worth an extra $148 million to invest in research and development, bringing the total amount of tax relief available to innovative businesses to $555 million a year, according to the Treasury. From 1 August, the rate available for qualifying SMEs investing in R&D increased from 150 per cent to 175 per cent of their investment. There were also changes in the rules governing the size of business that can apply for tax relief. This has increased from firms with 250 employees to firms with up to 500 employees, with the associated limits on balance sheet value and turnover also doubling. Treasury Secretary Angela Eagle said: “The R&D tax credit schemes are the government’s most important policy in support of R&D investment by companies in the UK. The announcement will build on more than $1.85 billion worth of support already provided.”

Employment up as government aims to boost apprentice numbers
The number of people in employment in the UK rose by 61,000 in the three months to February and the numbers classed as economically active increased by 73,000, according to the latest figures from the Office for National Statistics. Unemployment was 47,000 lower than for the same period a year earlier. Stephen Timms, Minister for Employment, said: “The figures show that the number of people in work in the UK is at a record level. Employment continues to grow, with 60,000 more people in work now than three months ago, and over 400,000 more in work than this time last year.”

To help improve skills and boost employment, the government has published a draft Apprenticeships Bill, which for the first time will establish a statutory basis for the entire apprenticeships programme. Over the past decade, the number of young people and adults starting apprenticeships has more than doubled, with 184,000 starts last year. However, the government is aiming to massively increase the number of apprenticeships available, and is launching a new National Apprenticeship Service (NAS), which will bring together a wide range of services and operations currently dispersed among a range of agencies. Employers will be able to advertise apprenticeship vacancies through a national portal, and the service will help young people interested in apprenticeships to understand the range of opportunities that exist.

The government plans to increase funding for the apprenticeships programme by almost a quarter between 2007-08 and 2010-11 to over $1.85 billion. Minister for Schools and Learners Jim Knight said: “We anticipate that around one in five of all young people will be undertaking an apprenticeship in the next decade. In the coming years, we want apprenticeships to be seen alongside university as a great option for young people who want the best jobs, the best careers and the best chance to get on.”

British companies create more wealth than European rivals
The largest UK-owned companies continue to dominate their European counterparts when it comes to the creation of wealth, according to the 2008 Value Added Scoreboard from the Department for Innovation, Universities and Skills (DIUS). This is the seventh annual edition of the scoreboard, which uses ‘value added’ (VA) by companies to measure the amount of wealth they create. VA is defined as the difference between sales and the cost of bought-in materials, components and services. The Scoreboard lists the VA of the top 800 UK companies and the top 750 European companies (E750), including the 185 UK companies that added the most value in the past year.

The Scoreboard, which provides a broader perspective on a company’s economic contribution than operating profit alone, shows that almost 23 per cent of all European VA last year came from UK companies, more than any other country. It also found that the E750 companies generated VA of $3,750 billion, which was concentrated in three countries: the UK, France and Germany; VA by the UK800 increased by 9.6 per cent in the past year, amounting to some $1,195 billion; and the top ten sectors contributed 62 per cent of the UK’s VA.

It also shows that British companies pay more in corporate taxes on the wealth they create than their competitors in Germany, France and Switzerland, with the 185 top wealth-creating companies in the UK paying 12 per cent of their VA in taxes last year. German companies paid 6 per cent of their VA in tax, while French and Swiss companies paid 8 per cent. According to the Treasury, the UK has the lowest headline rate of corporation tax in the G7, but other countries offer more generous tax breaks that mean companies pay lower rates in practice.

In addition, the amount of VA rose faster in other large countries last year – but UK-based companies still dominated the league table, with UK groups such as Royal Dutch Shell, BP, Vodafone and HSBC generating almost a quarter of all VA in Europe. British companies are also more efficient at creating wealth, according to the Scoreboard. Last year, they converted every £100 spent on labour and equipment into almost £194 of added value, compared with £142 for German companies and £157 in France.

Meanwhile, HSBC has jumped from third to first place in Banker magazine’s latest annual survey of the world’s top 1,000 banks (Top 1000). HSBC is the first non-US company in nine years to lead the rankings, by virtue of its Tier 1 capital and profit before tax, which last year reached a new high. The survey found that US banks now account for just 14 per cent of aggregate Top 1000 pre-tax profits, down from 24 per cent last year, while the share of Asian banks rose to 19 per cent from 12 per cent. European bank profits remained flat at 41 per cent of the total. In April this year, HSBC also topped the Forbes 2000 list of the world’s largest companies – the first non-US company to do so, having delivered 26 per cent growth in annual revenue and 31 per cent in net income over the past five years.


London set to continue as global investment hub
London will continue to attract inward investment in the coming years despite the credit crunch, according to Michael Charlton, chief executive of Think London, the UK capital’s foreign direct investment agency. The organisation’s annual review showed that the city had its most successful year ever for FDI in 2007/08, with 178 international companies setting up or expanding businesses in the year to March. Between them, they contributed $1.3 billion to the city’s economy and created 6,152 jobs, 65 per cent more than in 2006/07.

Charlton said: “We realise that 2008/09 will be challenging, but we are well positioned to attract international investment, by taking a flexible approach and adapting our strategy to where the opportunities in the market exist. The emerging markets in particular will be a key focus for us and we are confident the strong leads coming out of Asia Pacific will continue. The opportunities around London 2012 will also be significant and we have a strategy in place to leverage this by undertaking a number of initiatives during and after the games in Beijing.”

The annual review shows that the US remained the largest investor in London, creating nearly half (44 per cent) of the total number of jobs (2,739), followed by India (825 jobs). ICT proved the strongest sector, with companies such as leading online network LinkedIn establishing a base in the city and Nokia setting up a new design centre in central London. In all, according to Think London, FDI adds more than $96 billion to the city’s economy each year, and has created more than 500,000 jobs, representing 13 per cent of all jobs in London. In addition, employees of foreign-owned companies are more than twice as productive as other London workers when measured across all sectors. On average, FDI companies have grown by 165 per cent since they first invested in London, and only 6 per cent have considered leaving.

London was recently named the world’s top business centre in a study by MasterCard that rated leading cities according to how they influence the global economy. London eclipsed second-placed New York, which was held back by bond market regulations, a more volatile US currency and an economy considered to be less stable than Britain’s. Tokyo came third in the inaugural MasterCard Worldwide Centres of Commerce index, ahead of Chicago. Hong Kong, ranked fifth, edged out Singapore in sixth place, and these two were followed by Frankfurt, Paris, Seoul and Los Angeles.

Sydney was ranked 14th in the index while Dubai was named the leading centre in the Middle East, ranking 37th. Shanghai came 32nd and Beijing 46th, while India’s business capital Mumbai ranked 45th. The index, which covers 63 cities and which MasterCard plans to release annually, was compiled from research by a panel of independent economic, urban development and social science academics from around the world. It rated cities according to their legal and political framework, economic stability, ease of doing business, financial flows, standing as a business centre and as a centre of knowledge and information.

 

More and more Chinese companies are coming to London, either to set up their euro-area headquarters or to seek stock market listings on the London exchanges. Several big deals recently, such as Chinalco’s joint acquisition of a 9 per cent stake in Rio Tinto and the purchase of a 1 per cent stake in BP by a China state fund, were conducted in London, and the Boao Forum For Asia International Capital Conference recently held its summit meeting in London for the first time instead of an Asian city. London is currently home to the European regional headquarters of some 250 Chinese companies and institutions; two-thirds of Chinese companies have chosen to base their European offices in the UK, with the rest on the Continent, mostly in Germany. The Chinese government is focusing on London as the centre for its global mergers and acquisitions activity, and the British government is seizing the opportunity. At the beginning of this year, Premier Wen Jiabao agreed with the British Prime Minister Gordon Brown to double the number of Chinese companies listed on the London Stock Exchange (LSE) and to increase bilateral trade to $60 billion by 2010. Currently, 74 Chinese companies are listed on the LSE: 68 on the Alternative Investment Market (AIM) board, and six on the main board. Alistair Darling, Chancellor of the Exchequer, is encouraging China Investment Corporation (CIC), China’s sovereign wealth fund, to invest in London, while the Lord Mayor of London, David Lewis, wants CIC to establish its first overseas office in the city. Shanghai meanwhile is modelling its Lujiazui Financial Zone, China’s projected financial centre, on the City of London financial district. According to Long Yongtu, former Vice Minister of Commerce, head of the Chinese WTO negotiation delegation and Secretary General of the Boao Forum, London is the best venue for the foreign expansion of Chinese companies. “London is more global than New York. Britain has wide relations with Africa, Asia and South Asia through the Commonwealth, and with East European countries through the EU, and these are all to its distinct advantage,” he commented.

London is also hoping to woo investors from Brazil. Think London recently launched Touchdown London, the business incubator service already established for Indian, Chinese and Mexican companies, to Brazilian companies looking to globalise their businesses. Brazil is the UK’s most important trading partner in Latin America, and in 2007 bilateral trade between the two increased by 25 per cent over the previous year to $3.2 billion. Growth in the Brazilian economy is fuelling the internationalisation of Brazilian companies, and Think London expects to support an increasing number of Brazilian businesses looking to expand into London this year. It has already assisted multinationals such as oil exploration and production company Petrobras and Banco Bradesco, Brazil’s largest banking group, to locate in London.

Regions report another record year for inward investment
London is not the only part of the UK attracting overseas investors – the Annual Review for 2007/2008 of government investment body UK Trade & Investment (UKTI) shows that the British regions are also continuing to attract many companies from overseas. In another highly successful year, the UK won a record 1,573 investment projects, up 10 per cent on the previous year, to mark a fifth consecutive year of growth, according to the UK Inward Investment 2007-8 report. Of this total, 653 projects (42 per cent) were new projects and 436 (28 per cent) were expansions by existing investors.

R&D operations increased by 83 per cent to 251 projects, with high-value and R&D-intensive projects representing two-thirds of the total. The number of advanced engineering projects rose by 61 per cent to 182 projects, while environmental technologies projects increased by 22 per cent to 59. Combined, overseas-invested projects created 45,051 new jobs and safeguarded a further 58,488, bringing the total number of associated jobs to 103,539. This was up 32 per cent year-on-year, and equated to more than 120 new jobs every day as a result of overseas investment.

In terms of job creation, London was top, with 8,079 jobs. It was followed by the West Midlands, which created 4,640 new jobs and safeguarded 25,480 more, with a total of 112 FDI projects. These included 15,000 jobs which transferred ownership from US-owned Ford to Indian-owned Tata following Tata’s acquisition of Jaguar and Land Rover. Regional Development Agency (RDA) Advantage West Midlands was directly involved in 45 projects – an increase of 15 per cent on 2006/07 – which saw 2,846 jobs created and 469 safeguarded. Successful projects involving Advantage West Midlands in 2007/08 included the decision by Ericsson, the Swedish telecommunications giant, to set up an R&D facility at Ansty Park, Coventry, moving 650 jobs, and Shanghai Automotive Industry Company creating and safeguarding 350 jobs by establishing the SAIC Motor Technical Centre in Warwickshire. In all, the West Midlands is home to around 2,300 foreign-owned enterprises employing 250,000 people – around one in ten of the region’s workforce.

Birmingham, West Midlands

In North West England, 155 investment projects created or safeguarded 14,647 jobs, almost twice as many as in 2006/07. The region saw on average 13 inward investment projects secured every month and over 280 jobs created or safeguarded every week throughout the year. The Northwest Regional Development Agency (NWDA), in collaboration with its sub-regional partners, attracted projects from all around the world. A recent study by DTZ highlighted the significance of FDI to the Northwest economy: over 17 per cent of regional gross value added (GVA) is accounted for by foreign-owned companies, and economic output per worker is almost 50 per cent higher in foreign-owned companies compared with the regional average. The USA remains the key source of FDI into the region, followed by Germany, France and the Netherlands.

In the North East, there were 66 new inward investment projects in 2007/08, creating 1,572 new jobs and safeguarding a further 2,062. RDA One NorthEast was directly involved in 52 of the 66 projects, seven more than in 2006/07. Highlights included Californian wind energy giant Clipper Windpower’s decision to develop a new generation of offshore wind turbines at the New and Renewable Energy Centre (NaREC) in Blyth; Japanese energy efficiency specialist Yanmar’s collaboration with NaREC in the development of biodiesel systems; and Fabricom Offshore Services’ decision to create a base for its offshore oil and gas engineering business in North Tyneside, creating 250 jobs. In total, there are currently 588 foreign investors based in the North East, employing 72,762 people. The US is the biggest investor, with 195 firms, followed by Germany with 59 companies and Japan with 47. Last year was a record for the region in attracting investment from Japan, with 14 projects secured, safeguarding 170 jobs and creating a further 107. This included Nissan’s decision to build a brand new car at its Wearside plant, where it recently created 800 new jobs to cope with demand for its Qashqai model.

Yorkshire and Humber reported its highest ever levels of foreign investment in 2007/08, with 124 inward investment projects, an average of more than two a week. RDA Yorkshire Forward delivered 57 of these investments, attracting over $592 million in private investment and creating more than 1,100 new jobs. The US and Europe remained the main sources of investment as the region enhanced its reputation as a centre for R&D, attracting 19 international research collaborations. Over 40 per cent of the region’s largest companies are foreign-owned, with manufacturing and financial services companies among the top investors. New investors included the likes of Polish-owned Can Pack, which plans to open a high-tech manufacturing plant in Scunthorpe, and the Indian-based ICICI Bank, which has opened its first regional branch in Leeds. Within the region, for the second year running South Yorkshire attracted the greatest levels of inward investment, followed by West Yorkshire, North Yorkshire and the Humber.

The South East England Development Agency (SEEDA) secured 77 investments by overseas companies in the course of the year, creating almost 2,500 jobs. The region is attracting increasing levels of valuable high-tech investment including, for example, one by French-owned company Astrium in Portsmouth that secured 360 jobs, the result of a $730 million European Space Agency (ESA) satellite project awarded to companies in the UK. In all, 81 per cent of investments in the South East are classed as high-tech, with 40 per cent of them in the ICT sector. The number of R&D investments has doubled since last year, with other growing sectors including healthcare technology, aerospace and defence. Overall, the South East attracted more investment than any other UK region outside London, with enquiries 25 per cent up last year despite the economic downturn. Sources of investment continue to be diverse, with projects last year coming from 30 countries and 20 different business sectors.

Commenting on the national results, Foreign Secretary David Miliband said: “The UK has a global reach and our investment pipelines are spread across the world. Once again, the US remains our biggest investor; but we have also increased investment from a range of key countries including Sweden and Japan, important for the rich research and development investment they bring; Australia, highlighting that the UK is an attractive base for expansion within Europe; high-growth markets such as India and China; and Ireland, Germany and the Netherlands, demonstrating that the UK’s economy represents an opportunity for our neighbours too.”

Lord Digby Jones, Minister for Trade and Investment, commented: “As a passionate advocate of UK business success, I am delighted these figures reflect our continued ability to punch above our weight on the global stage. In a year of international financial uncertainty this impressive performance exemplifies that now, more than ever, the UK economy is synonymous with opportunity and global potential.”

New high-tech investment announced in aerospace sector
Canadian aerospace firm Bombardier – the world’s third largest civil aerospace company – is to invest more than $925 million in Belfast, Northern Ireland, where it will design and manufacture the wings for its new aircraft, the 110–130-seat CSeries family of airliners, which is expected to enter service in 2013. This represents the largest single investment in Northern Ireland by any company. The UK government has also agreed in principle to provide $96.2 million to the project, as part of a wider $286.8 million investment package in Bombardier. The new programme will create a centre of excellence in Belfast for aircraft wing manufacturing, consolidating the UK’s position as a world leader in this field, and will support over 800 jobs at Bombardier Aerospace Belfast, which employs around 5,000 people at various sites in and around the Northern Ireland capital.

Bombardier will manufacture the wings for its Cseries in Belfast

Bombardier’s investment will also benefit the wider UK aerospace supply chain, and the company is discussing possible work packages with a range of companies, particularly in the area of composite materials. Business Secretary John Hutton said: “The UK’s aerospace industry is world-class. This investment in Belfast demonstrates the Government’s commitment to supporting high-tech, high-skilled aerospace companies in the UK and to ensuring we remain a world leader in this sector.”

Another international aerospace firm, Netherlands-based EADS Defence & Security Systems, has expanded its UK headquarters in Newport, South Wales in a $64.8 million development. The company plans year-on-year growth of 20 per cent at the site and will create more than 100 new jobs. The new wing of its HQ was opened in July by the Duke of York and Welsh First Minister Rhodri Morgan, who said: “EADS makes a valuable contribution to the Welsh economy and is a flagship for science and engineering excellence, with an export base and supply chain that confirms the nation’s reputation for high-tech innovation and expertise.” The firm’s UK operations work to develop complete communication and information systems solutions and it is a leading supplier to the Ministry of Defence. In addition to Newport, EADS has sites across Britain, including at Leicester, Farnborough and Oxford.

A consortium of leading UK defence companies has signed a contract with the Ministry of Defence (MoD) to develop the first phase of a new unmanned aircraft, in a project called Mantis. The group includes BAE Systems, Britain’s largest defence company, aero-engine manufacturer Rolls-Royce and defence research group Qinetiq. Unmanned aircraft are already being used by British troops in Afghanistan, and are one of the fastest-growing areas in the defence sector, although the technology is still in its infancy. “Mantis is a significant step in providing a platform with which we can experiment with this new technology,” said Air Vice-Marshal Simon Bollom, director-general of Combat Air at the MoD. BAE unveiled a full-scale model of the twin-engined Mantis, armed with laser-guided bombs and missiles, at the Farnborough International Airshow in July. Ground testing of the aircraft is set to take place later this year, with a first flight planned for early 2009.

Work to begin as Crossrail project receives Royal Assent
London is set to get its long-awaited west-east rail link, with the Bill for Crossrail – the biggest addition to the transport network in London and the South East for more than 50 years – finally completing its Parliamentary process and receiving Royal Assent. The way is now clear for work to get under way on what will be the largest civil engineering project in Europe. A $29.6 billion funding package has been secured for the project, which is due to be operational in 2017. It will bring more capacity and faster journeys for passengers, as well as a $37 billion boost to the UK economy.

Image of proposed new Crossrail station at Tottenham Court Road

The line will run from Maidenhead and Heathrow in the west through tunnels under central London, with new stations at Paddington, Bond Street, Tottenham Court Road, Farringdon, Liverpool Street, Whitechapel and the Isle of Dogs (Canary Wharf), and then out to Shenfield and Abbey Wood in the east. For the first time, twin-bore tunnels will be built that are wide enough to carry mainline passenger trains beneath the heart of London. The tunnels will have an internal diameter of 6 metres, compared with 3.8 metres on the existing Tube system. In all, 21km of twin-bore tunnels will be constructed. Enabling works will take place next year, with main construction works set to begin in 2010. Up to 14,000 people will be employed in the construction of the new line.

Crossrail will increase London’s public transport network capacity by 10 per cent. When complete, there will be 24 trains per hour in each direction through Central London at peak times, providing substantial new passenger capacity and crowding relief, particularly on the Central and Piccadilly lines. Over 200 million passengers will travel on the line each year. It will bring an additional 1.5 million people within 60 minutes commuting distance of London’s key business districts and is forecast to create 30,000 jobs. It will also boost existing regeneration plans in the Thames Gateway area of east London. Trains will travel at up to 100 mph on the surface and 60 mph in tunnels. Heathrow will be 31 minutes away from the West End and 43 minutes from Canary Wharf, and Crossrail will cut journey times to the West End from many outlying parts of the capital.

Transport Secretary Ruth Kelly said: “This landmark project is of major significance to both London and the whole country. It will generate jobs and economic growth, help revitalise some of our most deprived areas and deliver major improvements for the travelling public. Crossrail has been talked about for decades, so I am delighted that now we have secured both the funding package and parliamentary approval so that work can finally begin to deliver this fantastic project.”

In a separate development, high-speed passenger train operator Eurostar is to introduce a daily direct service between Ashford International station in Kent, South East England, and Brussels-Midi in Belgium from mid-December 2008. The announcement has been described by local business leaders as “a real opportunity for serious economic growth” for Ashford and east Kent. Eurostar’s chief executive Richard Brown said he was delighted with the development, which would enable business travellers to reach Brussels before 9.00am, and hoped more demand could be raised.

Corby in the East Midlands – until now the largest town in Britain without a railway station –is to get a brand-new $18.9 million station that will link it with the railway network and London St Pancras. Network Rail has appointed contractor Dean and Dyball to build the new facility. Track work took place in June to replace track, sleepers and ballast, and construction work will run until late November. East Midlands Trains will manage the station, and the first train is scheduled to leave Corby on 14 December 2008.

The green light has also been given for a major renewal of the Tyne and Wear Metro system and a new river crossing in Sunderland in North East England, with Transport Minister Rosie Winterton announcing a new funding package worth around $740 million. “The Metro is an iconic system …. Almost $555 million will be spent to upgrade this service and ensure smoother running trains, better stations, better services and better provision of information to customers,” she said. The new bridge over the River Wear will create a gateway linking the A19 trunk road with the city centre and Port of Sunderland, improving access to key employment locations, reducing congestion and enhancing regeneration along the river corridor. Main construction work will potentially begin in late 2011, with completion due in spring 2014.


Wide range of new business accommodation in pipeline
Outline plans have been unveiled for a new mixed-use scheme at Wood Wharf in London’s Docklands. The master plan, a joint venture between British Waterways, Canary Wharf Group and Ballymore Properties, will include six buildings containing 4.9 million sq ft of office space and six residential buildings providing up to 1,668 homes and related facilities. The project also includes a new high street on the 17.3-acre site containing shops, cafes and bars, a waterfront hotel with 120 rooms, a new canal with moorings and walkways and a bridge linking the development to Canary Wharf. Meanwhile a Russian businessman, Vladimir Chernukhin – an ex-deputy Russian Minister of Finance – is planning to invest over $200 million to transform a former bank building into London’s first six-star hotel. Chernukhin bought the 1930s building, the former headquarters of Midland Bank, for $140 million two years ago. After reconstruction, it will have 184 rooms, several bars, spa salons and an elite club.

A new Innovation Centre created by MEPC Milton Park Business and Science Park will open this autumn at Abingdon in Oxfordshire, South East England. The purpose-built facility will provide business support for up to 60 small and growing technology companies. Named the Oxfordshire Innovation Centre, it is expected to comprise 39,000 sq ft over three floors, split between offices, meeting rooms and conference facilities. Construction work has already begun, and plans include an adjacent ‘graduation centre’ to provide grow-on space for businesses requiring over 1,500 sq ft of space. In total, Milton Park contains over 3 million sq ft of space and is home to over 165 businesses employing approximately 6,500 people. Located along the A34 in Abingdon and offering easy access to both the M4 and M40 motorways, it is home to a wide variety of organisations, from start-ups to multinationals, including a high proportion of high-tech firms.

Work has begun on a $1.85 million business centre that is set to create 60 jobs in Leamington Spa in the West Midlands. Althorpe Innovation and Enterprise Centre (AIEC) has received $1.8 million in funding from RDA Advantage West Midlands and will provide space for up to 40 high-tech businesses. The AIEC is being built on a derelict brownfield site in Leamington Spa Old Town, a target for new inward investment and community regeneration. Offering flexible workspace and a range of support services, it will become a business support hub for new and established companies in south Warwickshire. The project falls within the High Technology Corridor for Coventry, Solihull and Warwickshire, one of AWM’s target areas for economic development.

A former ironworks site in north Staffordshire in the West Midlands is being transformed into a business enterprise centre containing office and workshop accommodation, in a $20 million investment that is forecast to create 30 new businesses and 96 jobs. The North Staffs Enterprise Centre (NSEC) is part of a $74 million development of the Chatterley Valley site that is predicted to create up to 1,000 jobs overall. It will contain 94 high-spec office suites targeted at start-ups and small and medium-sized enterprises (SMEs), ranging in size from 178 sq ft to 1,838 sq ft, along with services including business and IT support, meeting rooms, break-out areas and staff facilities. Its managed workshop units will range from 1,077 sq ft to 3,656 sq ft and will be available together with the offices on flexible agreements. The workshop scheme is expected to be completed by Christmas, with the serviced office centre ready by June 2009.

Newport in South Wales has been ranked third in a recent survey of office locations outside London, with near-neighbour Swansea ranking fourth. The Lambert Smith Hampton Location Performance Index assessed 28 centres around the UK on key location criteria. Newport scored particularly well on competitive property costs and the high proportion of new and refurbished offices available and those under construction. It also scored competitively on wage levels and the low level of hard-to-fill vacancies. A number of companies have taken advantage: leading Welsh employer and FTSE 100 company Admiral Insurance, for example, is opening a new site at Langstone Business Park, near Junction 24 of the M4. The 30,000 sq ft Guinevere House will house a claims handling operation with around 90 new employees initially, potentially growing to 450 within three years. HSBC is creating 250 new jobs at a dedicated UK customer service operation for its banking arm at its Cleppa Park offices in the town.

Celtic Manor Resort, Newport

Meanwhile, construction has officially started on the new $64.8 million City Centre Campus of the University of Wales in Newport. The new campus will include a ‘Hothouse’ that will be a focal point for creativity, innovation and entrepreneurship, and will provide a home for the Newport Business School and the digital media, film and design elements of Newport School of Art, Media and Design. In another fillip for Newport, readers of Conference & Incentive Travel magazine have voted the town’s Celtic Manor Resort as the top UK conference hotel for the second time in three years. The five-star venue, which will stage the Ryder Cup golf tournament in 2010, beat off strong competition from other luxury retreats to land the title. In addition, a $41 million funding package has been agreed for a new railway station for Newport, which should be finished in time for the Ryder Cup. The complex will include new terminal buildings and car parks. Network Rail is to invest $27.8 million while the Welsh Assembly will contribute $14.2 million.

East Midlands targets speed and style
The Fédération Internationale de l’Automobile (FIA) has confirmed that the British Grand Prix will be retained on the Formula One World Championship calendar, and will move from Silverstone to its new home of Donington Park, in the East Midlands, from 2010. FIA President Max Mosley said, “We understand that the development programme planned for Donington will achieve the very high standards we and Formula One Management (FOM) expect from a modern F1 circuit. Finally, British Formula One fans will get the Grand Prix venue they deserve.”

Donington Park last staged a round of the FIA Formula One World Championship in 1993. On the back of a 10-year agreement, the circuit is planning a five-year, $185 million development programme to ensure that a first-class facility is in place for the 2010 race. The UK is a world leader in the design and the motor racing sectors, and six leading Formula One teams are located in the country. The automotive industry spent $31.5 billion in UK R&D projects in 2004, with half of this carried out for overseas firms, and the UK boasts several centres of excellence, including the International Automotive Research Centre at the University of Warwick.

Sportswear company Speedo, based in Nottingham, designed the innovative swimsuit that helped local girl Rebecca Adlington power to two swimming gold medals at the Beijing Olympic Games. Along with many of the world’s other top swimmers, Adlington, who hails from nearby Mansfield, benefited from Speedo’s LZR Racer swimsuit, which was developed in conjunction with the University of Nottingham and uses space-age technology to significantly reduce friction in the water. Since the swimsuit was launched, over 50 world records have been set by swimmers wearing it. The University of Nottingham worked closely with AQUALAB, Speedo’s competition R&D department to create Computational Fluid Dynamics (CFD), an instrumental computer modelling technique used to design the swimsuit, based on the physiological and biomechanical requirements of the athlete. David Wallace, International and Innovation Director at East Midlands Development Agency (emda), said: “This is an excellent example of the partnerships that exist between our world-class East Midlands research facilities and innovative global companies like Speedo. The University of Nottingham is one of the best in the world, as its continued success in winning national and international awards shows.”

emda meanwhile is aiming to attract French-speaking businesses with its Valued Investor Programme (VIP) Fast-Track service, a support package of intermediary services designed for French-speaking markets. Providing a single point of contact with a French-speaking business relationship manager, VIP Fast Track offers professional, free-of-charge services from private and public sector providers such as banks, solicitors and business advisers. Companies will receive personalised assistance to help them identify market opportunities, explore financing options, find premises and recruit staff. The East Midlands is already home to an estimated 3,000 French nationals and over 100 French businesses, including Lafarge, a world leader in building materials which has its UK Aggregates division in Leicestershire; Atos Origin, an IT services provider based in Nottingham; ALSTOM in Derby, which provides equipment for power generation; and Thales, a leader in the aerospace sector, which has a base in Leicester. The VIP service will be rolled out across France, Belgium and Switzerland in the coming months.


Regional news
US Pension fund TIAA-CREF, one of the world’s biggest money managers, is to open an office in London to manage its growing investments in the European property market. This is the first time in its 90-year history that the company – which manages about $420 billion on behalf of 3.4 million academics, teachers and doctors – has opened an office overseas, in a move that underlines the UK capital’s status as a global financial centre and a real estate hub. Tom Garbutt, TIAA-CREF’s global head of real estate, said that the current disruptions in markets would prompt the firm to increase its European investments. It already has about $4 billion of its $25 billion in global real estate assets in Europe, including stakes in landmark properties in London and Paris. He added that the firm chose London for its first international office because the city was “flush with real-estate talent”.

The University of Reading and Henley Management College, both in the Thames Valley in South East England, have merged and will form a new world-class business school, according to its backers. The Henley Business School has the potential to become the largest business school in Europe, combining the global reputation of the management college with the university’s reputation in real estate management and financial market trading. Tony Downes, deputy vice chancellor of the University of Reading, said that the development would create a “new global powerhouse” for business education. The school will offer a wide range of business qualifications, including undergraduate courses, doctoral degrees and Henley’s renowned MBA programme, along with pure research projects. Founded in 1945, Henley Management College houses around 7,000 students from more than 140 countries, and in 2006 won the Queen’s Award for Enterprise in the International Trade category for its training activities.

Manufacturing giant Unilever is to open a global Centre of Excellence for Drinks at Colworth Science Park in Sharnbrook in Bedfordshire, Eastern England. The advanced technology centre will focus on creating new products for all Unilever’s beverages across the globe, with a focus on drinks that deliver natural taste and health benefits from plants such as tea, fruits, vegetables and soy. The R&D centre employs 90 product developers and technology specialists from 15 countries and brings together all Unilever’s beverages experts at a single site. The company’s existing products include Lipton, the world’s leading brand of tea, and PG Tips, the UK’s number one tea brand. Colworth Science Park covers 205 acres of a 1,210-acre estate that includes parkland, sports facilities and a golf course.

Electronics group Philips – a global leader in healthcare, lighting and consumer products – is to relocate a key research centre to Cambridge in Eastern England. Philips Research, founded in 1914, has been based in Redhill, near London, for 60 years. The relocation to Cambridge – a hotbed for technology research – will enhance the company’s portfolio of research centres across the globe; it employs about 1,800 people at seven sites including the Netherlands, China, India and the US. Its new laboratory will be located on the Cambridge Science Park and its projects will support the company’s recent reorganisation into sectors of healthcare, consumer lifestyle and lighting. The centre will nurture existing research partnerships with other universities as well as strengthening links with Cambridge University. Current project work includes the development of easy-to-use, rapid diagnostic tests that could cut waiting times between diagnosis and treatment from days to minutes, using specific biomarkers of disease in blood, urine and saliva samples. Other work includes ultra-low-power radio solutions for healthcare applications, standardisation of wireless communications and alternative collaborations in electronics technology.

One of Europe’s largest insulation manufacturers is to invest more than $122 million in Grimsby in Yorkshire and Humber, after deciding to open its first UK plant there. Spanish-owned Ursa Insulation is to develop a 70,000 sq ft site at North Killingholme on the South Humber Bank, creating 130 jobs in the local area. The company is the third largest manufacturer of insulation in Europe and employs over 3,800 people across 38 sites. Its first UK manufacturing site is part of a drive to expand its UK market base, with sales currently predicted to rise to almost $74 million. To help finance the construction of the new facility, Ursa will receive a $3.5 million grant from RDA Yorkshire Forward through the government-funded Selective Finance Investment scheme.
 

Advanced Manufacturing Park, Rotherham

Castings Technology International (Cti) has announced plans for further expansion on the Advanced Manufacturing Park (AMP) at Waverley near Rotherham in South Yorkshire, two years after relocating its headquarters there. Three acres of land have been purchased as part of an $8.7 million project that will increase the organisation’s workspace to 90,000 sq ft, and construction has started on a 40,000 sq ft building adjacent to its existing HQ. Cti is Europe’s leading centre of excellence dedicated to providing independent R&D, technical support and consultancy services to the castings and metals-related industry. The new facility will house additional R&D equipment, production-scale ‘technology demonstrators’ and a major investment in new facilities for integrity assessment and product certification. Cti’s chief executive, Mike Ashton, said: “The confidence to undertake another major investment on the AMP so soon reflects the success we’ve achieved in recent years. This will ensure a sustainable future for Cti as one of the world’s leading centres for research, technology and services relevant to casting supply chains and new markets.”

Also in Rotherham, the go-ahead has been given for Europe’s biggest covered leisure, entertainment and sports destination. Rotherham Metropolitan Borough Council has approved a development agreement for the YES! Project, which is set to bring over $720 million in investment and create up to 3,000 jobs. Work is expected to begin on the site – a hillside rising up from Rother Valley Country Park and just off the A57 near Swallownest in the south-west of the borough – before the end of the year.

YES! Project, Rotherham, will be Europe’s biggest covered leisure, entertainment and sports destination

Manchester in North West England has been named as Europe’s top destination for research and development activities in a study of tax costs by KPMG. The study found the relief regime in the city is one of the most attractive in the world, surpassed only by the Canadian cities of Montreal, Vancouver and Toronto. In addition, the report found that the UK overall is one of the most attractive locations for R&D, with only Canada and the Netherlands having a better tax relief system among the 35 countries examined. Colin Sinclair, chief executive of Greater Manchester inward investment agency Midas, said: “What makes Manchester particularly attractive for research and development activities is its graduate talent pool, highly-skilled workforce, good transport links and connectivity, and a varied and cost effective property offering.”

Bank of Ireland has announced that it is aiming to double its Scottish workforce over the next three years, after reporting a 6 per cent increase in profits to $2.6 billion. The Irish bank is making a significant investment in business and mortgage banking in Scotland, which represents a major growth market. “We currently have around 30 people in Scotland and our expansion is really controlled by the quality of people we can get. We would like to eventually reach a market share in business banking of around 5 per cent,” said Des Crowley, UK chief executive of Bank of Ireland.

Dialog Semiconductor, a leading supplier of mixed signal power management products for the portable consumer market, is establishing a new design centre in Edinburgh, Scotland, creating at least 20 jobs this year. The German microchip developer has been awarded a $2.4 million R&D grant from Scottish Enterprise towards a $10.2 million project to develop cutting-edge audio components. Dialog’s new Edinburgh office will become one of its global centres of excellence, focusing on the development of enabling technology for enhanced signal processing design to complement the company’s energy management integrated circuits. The first products are expected to be introduced within 12–18 months.

The creators of Dolly the Sheep, the world’s first cloned adult animal, have been awarded the prestigious Shaw Prize. Ian Wilmut and Keith Campbell were awarded the life science and medical prize, which they will share with Professor Shinya Yamanaka of Kyoto University for their work in stem cell research. Professor Sir Ian Wilmut is an internationally recognised expert in stem cells and cloning and a pioneer of research into degenerative brain diseases. He is currently Chair of Reproductive Technology and Director of the MRC Centre for Regenerative Medicine at the University of Edinburgh. The Shaw Prize is an international award to honour individuals active in their respective fields who have achieved significant advances. Established in 2002 by Hong Kong philanthropist Sir Run Run Shaw, the prize is worth $1 million.

The winners of the UK’s premier computer games design competition – Dare to be Digital –were announced recently at an awards ceremony in Edinburgh. Three winning teams each received a prize of $4,600 and a BAFTA nomination: Blue Skies (Abertay University) for their game ‘Origamee’, Ctrl D (Peking University) for ‘VegeMe’ and Dark Matter Design (Wolverhampton University) for ‘Boro-Toro’. The Contrived team (Edinburgh University) won the Audience Award sponsored by Microsoft for their game Grav. Organised and promoted by the University of Abertay Dundee in association with Channel 4, Dare to be Digital attracted 17 five-strong teams of students from as far afield as Birmingham and Beijing, who spent 10 weeks in host centres at universities across the UK. Seventeen judges from 15 different companies, including Sony, Babel Media, Channel 4 and Sport Interactive, picked the three winners based on creativity and innovation, use of technology and market potential. The contest, which was established at the University of Abertay Dundee, opened itself to international entrants in 2005 and has since attracted teams from Malaysia, Japan and Canada, among other countries.

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