Economic Outlook

Following the last quarter of 2009 small growth 0f 0.4% in GDP, the first quarter results for 2010 were 0.2% indicating a surprise fall. Economists put this down to heavy smoke in January disrupting manufactures coupled with the VAT rise at the beginning of the year. Unlike other European Countries, the UK was first into recession and the last out.

Inflation for March increased to 3.4% on the back of higher fuel costs which was much higher than many European countries. 

Construction sector growth in April was the fastest for two and half year. This was the second consecutive month of growth. House building expanded the most and civil engineering was much slower. Predictions are for further growth in the coming quarter.

After the General Election in early May and the eventual formation of a Coalition Government the major tasks begin. Faced with GDP at minus4.9%, Bank Bail-out at £439bn, National Debt of £772bn, Quantitative Easing costs of £200bn and Unemployment of 2.61m. No modern government has faced such a monumental task. The legacy left by Gordon Brown’s Labour Government will have repercussions throughout the country with reduced Government investment and increased taxes. Unless debt is reduced, borrowings will increase and become more expensive increasing the time needed to stabilise the country.

Inflation in April reached 3.7% dropping back to 3.4% in May, putting pressure on inflation. The OECD suggested that interest rates would need to rise to 3.5% by the end of 2011 to put the lid on inflation.

In their book Crisis Economics, Nouriel Roubini and Stephen Mihm predicted the banking crisis two year ago. During a BBC interview on 25 May Nouriel Roubini said the Banking Industry had not learned the lessons and stoking problems for the future. With pressures on the Euro, he predicted a double dip recession and possible exit by some countries. A comment by a Far Eastern economic pundit was, “Europe is treading on mines and they have yet to explode”.

The coalition government started to spell out the problems inherited from the Labour Government and the consequences for the country. Following Oliver Letwin’s emergency budget, the major impacts on business are:

Rise in VAT fro 4 January 2011

Freeze on Public sector pay for two years, in effect a wage reduction.

Rise in capital gains tax to 28% for high earners.

Banking Levy of £2bn.

Looking to reduce the £200bn welfare bill.

Focus on regional job creation by reduced NIC’s.

Search for department expenditure reductions of 25%.

Overall aim to pay off the debt within this parliamentary term.

New Business

After a very busy first quarter, new installation slowed down in April around the run up to the election. Whether this had any impact on business activity is difficult to quantify.

Noise is become an issue when locating an air conditioner in Kensington. Using the standards applied by City of Westminster Council, many other Councils follow the leader in this field. The standard applied is for a noise level of 10db (A) below background. In the residential area of Cadogan Gardens we installed a Daikin split system for a ground floor apartment bedroom with the condenser located on the roof. To obtain Kensington & Chelsea Planning Permission we had to install the condenser inside an Environ acoustic enclosure. Taking the noise level of the condenser at 47db (A) we achieved a reduction to 25db (A), not an insignificant reduction. This project started in May 2008 and we supported the client throughout the protracted negotiations with Local Authority, Landlord and residents.

A contract has been concluded for HVAC and electrical maintenance for the Chicago Rock Restaurants in the South East. The programmed visits have been based around the client’s requirements to maintain the equipment to provide a comfortable environment for the customers.

Renewable Heat Incentive (RHI)

Government introduced the RHI Scheme to encourage domestic and commercial organisations to invest in equipment that reduce energy consumption. The focus is on biomass boiler, solar heating, photovoltaic, ground source and air to air heat pumps.

Energy Building Performance Directive (EPBD)

As part of the EU Directive the EPBD was introduced across Europe to reduce the greenhouse gas emission for domestic and commercial building. The framework agreement included calculating how much energy a building users in its lifetime. Setting of minimum standards of energy use and performance for new and existing buildings. Introduction of a certification scheme with energy rating and instigation of regular assessment of heating and cooling installations by independent inspectors. Together these procedures should be recorded in your EPBD file.

This legislation has been introduced over the past few years to measure, record and improve the performance of buildings.  All existing air conditioned building with an aggregate capacity over 12kW will need to complete the first inspection by January 2013. Thereafter, inspections will need to be carried out at least every 5-year. You should not forget the F-Gas Regulation July 2007 that requires regular testing for leakage of refrigerant.

Training

Moving towards training all our air conditioning engineers with the skills and knowledge necessary to achieve the C&G 2079, we are being asked what this entails. While a number of organisations are able to provide this training, we have selected Ellis Training Work as our provider. The principle John Ellis is past President of Institute of Refrigeration, past Chief Examiner for the City & Guilds and the person who designed the course. His approach is not just to get trainees through the examination but to educate them and increase the knowledge in the industry.

What will be gained?           Sufficient skills, knowledge and techniques to:

Fabricate & fit mechanical and brazed joints

Pressure test and evacuate to BSEN378

Charge a blended refrigerant

Analyse system performance to ensure efficiency (using pressure, temperature, refrigerant state and rule of thumb)

Leak test to EC1516/2007

Maintain ‘F Gas’ log books and records

Handle refrigerant safely & dispose of legally

Ensure systems are tight, efficient in their use of energy and meet the F Gas legal requirements

June 2010