ICAEW chart of the week: Cocoa

My chart for ICAEW this week looks at the price of cocoa, which has been popping as shifting weather patterns have caused harvests in Ghana and Côte d’Ivoire to collapse.

Line chart

ICAEW chart of the week

Cocoa futures price per tonne

Line starts at 30 Oct 2023 £3,399
Bumps around to get to 30 £3,381 on 30 Dec 2023
Moves up more sharp to £5,454 on 29 Feb 2024
Continues up sharply with some zigs and zag to £8,370 on 2 Apr 2024.

Falls a bit but then rises sharply, then falls, then rises very steeply to £10,173 on 19 April.

Then falls (with a couple of zigs) to £8,418 on 30 April 2024.

2 May 2024.
Chart by Martin Wheatcroft FCA. Design by Sunday.


© ICAEW 2024

Developments in international commodity markets can often seem only distantly connected with everyday life, but for us chocolate lovers the quadrupling in the cocoa price since the beginning of last year is causing concern, not just about how much we will have to pay for our favourite sweet treat, but whether our next fix might be in jeopardy.

My chart this week skips over the just 65% increase in the one-month London cocoa futures price from £2,060 per metric ton at the end of 2022 to £3,399 at the end of October 2023 to focus on the last six months, during which the price has soared to record highs.

As the chart illustrates, the price had stabilised at around £3,400 to £3,600 per tonne between 30 October 2023 when the price was £3,399 per tonne, to 8 January 2024 when the price dipped to £3,381. The price has increased rapidly since then, up to £5,454 per tonne on 28 February, to £8,370 by 2 April before zigzagging up to a peak of £10,173 per tonne on 19 April. The price came down to £8,418 per tonne on 28 April 2024 (or just under £8.42 per kilogram) as buyers scaled back purchases in the light of lower spot prices, as well as concerns about the ability of suppliers to meet scheduled delivery commitments.

The rapid rise in prices has been driven by poor harvests in Ghana and Côte d’Ivoire, the two largest producers of cocoa as drier weather, hotter temperatures and shifts in rainfall patterns have all adversely impacted growing conditions. With poor harvests expected to continue and limited options for alternative supply in the near-term, global cocoa prices are unlikely to come back down any time soon.

This has of course fed into the cost of chocolate, with the UK media reporting that Easter eggs cost 50% more this year than in 2023, while our favourite chocolate treats are much more expensive than they were.

One consolation – at least for the Bank of England’s Monetary Policy Committee – is that chocolate constitutes less than 0.6% of the consumer price inflation index, meaning that even if chocolate inflation continues to accelerate, it shouldn’t stop the overall inflation level from coming back down to target in the coming months.

This chart was originally published by ICAEW.

ICAEW chart of the week: How we spend our time

Time may be relative, but that doesn’t stop our national statisticians from attempting to track what we do each and every minute of the day.

Doughnut chart adding up to 24 hours:

Sleep and rest: 8.9 hours
Personal and family: 2.9 hours
Household: 2.6 hours
Work and study: 4.2 hours
Leisure and other: 5.4 hours

According to the Office for National Statistics (ONS), adults in the UK spend 24 hours each day on a wide range of activities.

Our chart this week analyses how we spend our time divided into five broad categories, starting with sleep and rest, which takes up 8.9 hours a day on average, followed by 2.9 hours on average spent on personal and family activities. Unpaid household work takes up 2.6 hours, while work and study absorbs a further 4.2 hours, leaving an average of 5.4 hours for leisure and other activities.

These numbers are averages across the whole week, including weekends, and are based on all adults from the age of 18, including those who have retired.

The statistics are more detailed than shown in the chart with personal and family time of 2.9 hours breaking down into 2.4 hours on personal care, 0.4 hours on unpaid childcare, and 0.1 on unpaid adult care. Personal care in turn can be further analysed into 1.3 hours spent eating and drinking, 0.9 hours on washing, dressing, using the bathroom or self-grooming, 0.1 hours on medication or other health-related care, and 0.1 hours in other personal activities.

The average amount of time spent on work and study of 4.2 hours comprises an average of 1.0 hours travelling, 2.1 hours working away from home, 0.8 hours working from home, and 0.3 hours on study. 

Leisure and other activities of 5.4 hours a day include an average of 3.7 hours in entertainment, socialising and other free time, 0.8 hours using a computer or other device, 0.3 hours on exercise, sports and wellbeing, 0.2 hours on DIY or gardening, 0.1 hours volunteering and 0.3 hours on other activities.

These numbers are averages over the course of a year and how we spend our time will of course vary according to age, gender, employment or study status, physical health, lifestyle and personal interests, as well as by time of year such as when we are on vacation. 

The one constant, at least on our planet’s surface, is that we have only a total of 24 hours to work with. Within that limitation, how to spend our time wisely, or perhaps even enjoyably, will always be a challenge.

This chart was originally published by ICAEW.

ICAEW chart of the week: UK debt financing requirement

16 October 2020: The Institute for Fiscal Studies annual pre-Budget report forecasts a doubling to £1.5tn in the amount of debt to be raised by the UK Government over the next five years.

UK debt financing requirement by year from 2020-21 to 2024-25, adding up to £757bn (March 2020 budget), £1,305bn (optimistic), £1,536bn (central) and £1,789bn (pessimistic forecast).

Although the Budget itself may have been delayed, the IFS Green Budget 2020 has been published on schedule, with a wealth (if that is the right word in the current context) of analysis on the economy and the public finances. 

With £201bn in discretionary measures and a £95bn economic impact from the coronavirus pandemic, the IFS is forecasting that the deficit will reach £350bn in the current financial year. At 17% of GDP, this is a level never before seen in the UK outside of the two world wars. 

Unfortunately, the effect of the pandemic on public finances will not be restricted to this financial year. Even if the economy recovers in 2021, or more likely in 2022, tax revenues will be significantly lower and spending significantly higher than they were previously expected to be.

This is perhaps best highlighted by looking at the UK Government’s gross financing requirement – the amount that the UK Debt Management Office (DMO) will be tasked with raising from external debt investors over the next five years to finance the shortfall in taxes compared with spending (the deficit), to finance business and other lending and to repay existing debts as they fall due. This is forecast by the IFS to double to £1.5tn in their central forecast, within a range from £1.3tn in a more optimistic scenario to £1.8tn in a more pessimistic scenario.

As the IFS points out, the enormous amount of debt being issued means that even small differences in financing costs will have a very large impact on the public finances. This is despite the sizeable proportion of debt being issued with long maturities (as long as 50 years in some case) that are locking in extremely low interest rates for decades to come.

Reducing interest costs on debt has provided the Chancellor with room to provide the unprecedented levels of financial support to the UK economy that we saw over the summer. The prospect of negative nominal rates could see investors paying the Government rather than the other way round, providing headroom for further interventions.

There is a downside, of course. The ‘good times’ of ultra-low interest rates may not last for ever, and with a central debt forecast at 31 March 2025 of 112% of GDP significantly higher than the 35% of GDP before the financial crisis a dozen years ago the exposure to changes in interests is that much more significant.

To find out more about the latest forecasts for the economy and the impact that will have on the public finances, please do read the IFS Green Budget 2020.

This chart was originally published by ICAEW.

ICAEW chart of the week: Local government in England

9 October 2020: The complex structure of regional and local authorities in England is just begging for reform, but will the rumoured plan to abolish county and district councils fix it for good?

Chart with three rings: regional tier, county or unitary tier and then district council tier, showing lots and lots of councils in England.

Local government in England, as illustrated by the #icaewchartoftheweek, is pretty complex with eight different types of regional or principal authority and a patchwork quilt of different tiers of government across the country.

This complex system comprises areas without a regional tier of government involving unitary authorities or county & district councils, and those with combined authorities atop unitary authorities or metropolitan boroughs (and one county and its districts) and the Greater London Authority atop 32 London boroughs and the City of London. (This excludes the 9,000 or so town, village and other forms of parish councils in England, mostly outside the major urban areas).

This complexity makes it very difficult for the Government to interact with local authorities in the absence of a consistent model of local government or a country-wide regional tier of government to act as intermediary. This contrasts (for example) with the federal system in Germany, where Chancellor Angela Merkel regularly speaks to the leaders of the 16 German states, who in turn deal with the local authorities in their areas. Similarly (although not formally federal), France has 13 mainland and 5 overseas regional administrations that President Emmanuel Macron and Prime Minister Jean Castex can talk to and who will deal with their constituent provinces.

The UK Government can and does communicate with London Mayor Sadiq Khan, Greater Manchester Mayor Andy Burnham, West Midlands Mayor Andy Street, West Yorkshire Chair Susan Hinchcliffe, Liverpool City Region Mayor Steve Rotherham, Sheffield City Region Mayor Dan Jarvis, North East Chair Iain Malcolm, West of England Mayor Tim Bowles, Cambridgeshire & Peterborough Mayor James Palmer, North of Tyne Mayor Jamie Driscoll and Tees Valley Mayor Ben Houchen, each of whom can represent their constituent local authorities. But, they only represent 44% of the English population, with a further 24 county council leaders and 46 unitary authority leaders to speak to cover the remaining 56%. That is a pretty big Zoom call, assuming borough and unitary leaders within the regional authority areas don’t also insist on joining in.

The delayed announcement of a plan to abolish the 25 county and 188 district councils and replace them with between 25 and 40 new unitary authorities (perhaps with some mergers with existing unitary authorities) will go some way to rationalising the existing system by going to a single tier of principal local authorities. This would bring local public services together under one roof and save money, albeit there are some concerns about whether some of the new authorities would be too remote from the local citizenry.

However, this is still likely to leave English local government reform unfinished with over half the country without a regional tier of government. Will the Government want to continue with its existing organic approach of combined authority formation or go for a more comprehensive programme to establish regional authorities across the whole country, similar to the French reforms of the 1980s?

This chart was originally published by ICAEW.

ICAEW chart of the week: UK population in lockdown

3 July 2020: Only a fraction of the population was working at their normal workplace during the Great Lockdown, but what will happen as businesses start to re-open and the furlough scheme becomes less generous?

UK population 67m: workforce 34m (working at workplace 9m, working from home 10m, furloughed 12m, unemployed 3m); outside workforce: children & students 16m, retired 12m, other inactive 5m.

The #icaewchartoftheweek takes a look at the workforce this week, illustrating how the lockdown has transformed the world of work over the last three months.
Our (admittedly) back of the envelope calculations based on ONS and HM Treasury data suggest that only around 9m of the 34m strong workforce have been working normally at their ordinary places of work during the lockdown, with somewhere in the region of 10m working remotely. In addition, just under 12m workers have been furloughed, comprising 9.3m employees on the coronavirus job retention scheme (CJRS) and 2.6m self-employed on the self-employed income support scheme (SEISS).
Unemployment, which was around 1.2m back in February, has jumped to an extrapolated estimate of around 2.7m by the end of June and is likely to grow still further as the furlough scheme becomes less generous from 1 July. The ONS’s experimental claimant count metric, which includes a wider group of workers needing financial support from the state, had reached 2.8m by the end of May and is expected to have exceeded 3m by the end of June.
The overall workforce of 34m excludes the 33m ‘economically inactive’ half of the population, comprising 16m children and students, 12m retirees and 5m other inactive individuals. The 2.1m students over the age of 16 included in this category excludes around 1m or so students with part-time work or who were looking for work prior to the lockdown who are included in the workforce numbers, while retirees include around 1.2m below the age of 65 who have taken early retirement. Other inactive individuals between the ages of 16 and 64 include 1.8m homemakers, 2.3m disabled or ill, and 1.1m not working for other reasons.
These numbers are a moving target as more workers will start to return to their normal workplaces over the next few weeks as the economy starts to re-open, even if many continue to work from home where they can. More worryingly, unemployment is likely to rise significantly with the furlough scheme requiring an employer contribution from July onwards and when it comes to an end in October.

This #icaewchartoftheweek was originally published by ICAEW.

ICAEW chart of the month: Cabinet government

26 June 2020: The prime minister has announced a reduction in the number of government departments. How big is the cabinet compared to the rest of the world?

The news that the UK Government is reducing the number of government departments by one prompts the #icaewchartofthemonth to take a look at the size of government executives across the world.
As the chart highlights, with 26 members, the UK cabinet is one of the largest amongst major economies – comprising the prime minister Boris Johnson, 21 department ministers and four ‘ministers attending cabinet’. This does not include the Cabinet Secretary or other officials, meaning that cabinet meetings generally involve more than 30 people in total.
Compare that with the more compact 16-member German federal cabinet (Chancellor Angela Merkel and 15 departmental ministers) and the ten-member Chinese state council executive (comprising the premier Li Keqiang, five vice-premiers and four other senior departmental ministers).
It is certainly much larger than FTSE-100 company boards, where the average size is 11, and very few listed companies have more than 16 board members.
There is some debate around whether reducing the size of the UK cabinet would be more conducive to effective government. Some suggestions that the merger of the Department for International Development (DfID) with the Foreign & Commonwealth Office (FCO) to form the new Foreign, Commonwealth & Development Office (FCDO) in September is the first step on the way to that goal – with further mergers possible. However, although there will be one fewer departmental minister, there is a reasonable prospect of the minister responsible for development at the FCDO being invited to attend cabinet given its importance to the government’s global agenda.
Of course, merging departments is not the only way to achieve a slimmer cabinet – for example, the 31-member Russian cabinet (not shown in the chart) rarely meets as one body. Instead, there are regular meetings of the 10-strong prime ministerial group (the prime minister Mikhail Mishustin and nine deputy prime ministers) and occasional meetings of the 20-strong cabinet praesidium that includes the most senior ministers as well.
The UK Cabinet also works in this way to a certain extent, with critical decisions often being made in smaller groupings of senior ministers, such as the 9-member National Security Council, the 9-member Climate Change Committee or the 12-strong EU Exit Operations Committee for example. Canada, with its 37-member cabinet, also operates through a series of cabinet committees ranging from around 8 to 15 members. However, in both cases, the full cabinet still meets regularly and remains the formal executive body for authorising government actions.
With rumours of a cabinet reshuffle in the UK this autumn, it will be interesting to see whether moves to reduce the size of the cabinet will actually take place or whether we will see further development of cabinet committees as the places to be ‘in the room where it happens’.

This chart of the month was originally published by ICAEW.

ICAEW chart of the week: Public sector employment

Headcount / FTEs - Health and social work: 1,925,000 / 1,657,000; Education 1,500,000 / 1,105,000; Public administration 1,056,000 / 897,000; HM Forces and Police: 402,000 / 391,000; Other 505,000 / 464,000.

The #icaewchartoftheweek is about public sector employment, illustrating how just under 5.4m people work for public bodies in the UK or around 4.5m full-time equivalents (FTEs). This is 16.5% of the total UK workforce of 32.8m as of last September on a seasonally-adjusted basis.

The largest employer in the public sector is the NHS, with a headcount of 1.7m out of the 1.9m who work in the health and social work sector (1.5m FTEs). Included in the million or so people who work in public administration is the 451,000-strong Civil Service (419,000 FTEs) with most of the remaining 605,000 working for local authorities and non-departmental public bodies (FTEs 478,000).

Total public sector headcount has started to increase again in recent years with NHS and non-NHS headcount up 6.8% and 0.6% respectively over a nadir of 5.2m three years ago (up 2.5% overall), compared with an increase of 3.8% and a fall of 12.1% respectively over the previous seven years (down 7.8% overall between September 2009 and December 2016).

With increasing demand on the NHS from more people living longer and the ‘end of austerity’ we should expect to see further increases in public sector employment over the next few years.

ICAEW chart of the week: Inflation

Chart: RPI 4% in Jan 2018, 2.5% in Jan 2019, 2.2% in Dec 2019. CPI: 3%, 1.8%, 1.3%. CPIH: 2.7%, 1.8%, 1.4%.

The #icaewchartoftheweek is on inflation this week, with the Office for National Statistics reporting that consumer price inflation fell to 1.3% in December 2019 – its lowest level for over three years and towards the lower end of the Bank of England’s target range of 1% to 3%.

Accompanied by very low levels of economic growth, this has prompted speculation that the Bank of England may cut interest rates at some point this year to try and stimulate the economy. They may also be hoping that plans to boost infrastructure spending will help kick-start the economy and encourage a tad more inflation at the same time.

The Chancellor is currently consulting on plans to converge the statistically flawed Retail Prices Index with CPIH (CPI including housing) over the coming decade. This will be good news for commuters and some students, given RPI’s use in calculating fare increases and interest payments. However, it will be less good for many pensioners and holders of government debt who currently benefit from higher rates.

ICAEW chart of the week: Q4 retail sales

Chart: 2018 Q4 retail sales £121.3bn + inflation (1.4%) £1.7bn + sales growth (0.9%) £1.1bn = £124.1bn 2019 Q4 retail sales.

Concerned about the state of the UK economy? Then the latest retail sales numbers will not have helped, with fourth quarter sales in the UK mainland just 0.9% higher after inflation over a year earlier, as illustrated by the #icaewchartoftheweek.

With population growth still estimated to be running at around 0.6% a year, this implies that retail sales per capita in Q4 (at around £635 per month) were just 0.3% higher after inflation than the same period in 2018.

Sales in Q4 of £124.1bn comprised £41.3bn on food, drink and tobacco, £21.3bn on clothing and footwear, £19.6bn on household goods, £11.5bn on automotive fuel and £30.4bn on other non-food purchases. On a per capita basis, this is equivalent to approximately £210 per person per month on food, drink and tobacco, £110 on clothing and footwear, £100 on household goods, £60 on automotive fuel and £155 on other non-food purchases.

This low level of growth on a year earlier reflects a slow-down in retail activity in the fourth quarter of 2019, with the Office for National Statistics reporting that Q4 sales were 0.9% lower than the third quarter on a seasonally-adjusted basis.

This will feed into fourth quarter GDP, which will not be good news for the Chancellor as he puts together what is being rumoured to be a radical first Budget in March – a weak economy will reduce his room for manoeuvre to reform the tax system while boosting public spending at the same time.

ICAEW chart of the week: A Single Market of 529m people

A chart comprising a colour-coded grid of 529 squares each representing 1m people in the Single Market.

2020 is likely to be an interesting year for many reasons, but in Europe all eyes will be on UK and EU negotiators as they attempt to agree a new trading relationship following the ending of the UK’s membership of the European Union at the end of this month.

As illustrated by the #icaewchartoftheweek, the UK is currently the third largest of the 32 members of the ‘European Single Market’, a trade bloc that comprises the 28 European Union member states and the four European Free Trade Association (EFTA) members.

The UK appears be aiming for a more distant trading relationship than that it currently enjoys as a EU member or that enjoyed by the 4 EFTA nations (three of which are members of the European Economic Area and the fourth – Switzerland – which has a series of bilateral agreements to give it access to the Single Market). Despite that, there are still a wide range of potential outcomes ranging from no agreement through to a much closer set of trading arrangements across multiple industries.

From a trade perspective, nothing much will change on 31 January when the UK formally ends it membership of the EU as the UK will continue to participate fully in the Single Market (as well as the EU Customs Union) until the end of the year. It will only be on 1 January 2021 that any new trade arrangements will come into force, changing the way that people and businesses operate across borders.

For now, it is very difficult to predict what exiting the Single Market will mean for the 67m people in the UK or the 462m people remaining in the Single Market. However, one prediction that can be made is that there will be plenty of opportunities for wild – and no doubt contradictory – headlines as the negotiators set to work!