With real after-tax incomes now likely to grow sharply, and big windfall gains courtesy of building society flotations, the economy looks set for a traditional consumer spending spree.But there’s a fly in the ointment. The consumer may be resilient but manufacturing, which is much more reliant on foreign sales, is suffering badly Output fell in the final quarter of last year. Official figures out yesterday suggested that the plight of manufacturing will persist for several months to come. What they revealed was that manufacturers continued to pile up stocks in the last three months of 1995. With European economies sliding into recession, industry can’t hope to export its way out of this problem of surplus inventories.

Instead, it looks set to supply extra demand over the months ahead from these stocks rather than by producing more.Manufacturing only comprises one-fifth of the economy nowadays, but a sharp downturn in production could prove contagious if people are laid off. None the less, most economists are betting on the consumer winning the day. But this may not be until well into the second half of the year, so comprehensively demolishing Mr Clarke’s ambitious 3 per cent growth forecast. More than ever, the Conservatives will be moving heaven and earth to the wire, delaying the election till the last possible moment in May next year.. OFT may spoil fun and games at the chemist

Don’t be so sure that the two rival bids for Lloyds Chemists are going to escape a Monopolies and Mergers Commission reference The Government’s mergers panel met this week. Word is that spurred on by a legion of complaints from small independent pharmacies, there is now a real possibility of the Office of Fair Trading calling a halt to the fun and games.
UniChem has always been confident of avoiding a reference.

Any concern about increased concentration in drug wholesaling ought to be answered by selling off a couple of depots, UniChem believes. The trouble is that this is not the main focus of concern with the competition authorities about this bid Rather, it is our old friend “vertical integration”. Independent pharmacies believe they could be disadvantaged if either of their two main suppliers, UniChem and Gehe, also becomes Britain’s leading retailer of pharmaceutical products.We are going to know soon enough which way the OFT wants to jump for there is in this bid battle a slight jurisdictional problem. The UniChem bid for Lloyds comes under the OFT’s jurisdiction, but the Gehe bid, because it is cross border, is being judged in Brussels. Gehe may be a German company, but its interests in Britain mirror almost exactly those of UniChem.

Plainly it would be a nonsense if the OFT was to refer UniChem while Brussels cleared Gehe. Not only would Gehe win by default, but we would also end up with a merger which by implication the OFT feels uncomfortable with.Ergo, if the OFT wants to refer UniChem, it is going to have to claim back jurisdiction over Gehe from Brussels. If it does attempt to claim jurisdiction, which we will know probably next week, then that tells us the authorities want to refer Poor Allen Lloyd. He may have to wait rather longer than he expected for his pounds 46m.. Ferries up against choppy seas

The battle raging between the good ship P&O and its cross-Channel rivals looks like being a fight to the death. An astonishing 84 crossings each day are made by ferries and hovercraft serving ports between East Sussex and Kent. And this does not include Eurotunnel services, or the Brittany Ferries operation further up the west coast.

As a result, you can cross the Channel, even with a car, for next to nothing. Even the man in charge of the Dover Harbour Board believes the current level of capacity cannot be sustained. Whole routes, including Ramsgate-Dunkirk, must be under threat.
Not by the look of it, however, until a great deal more money has been poured down the drain. Ferry firms are planning to pile even more capacity on to the Channel; nobody disputes that for at least one of the operators, and possibly more, this is tantamount to commercial suicide. Operators seem to have decided that the best way to take on Eurotunnel is to grab as much market share as possible by offering tickets at virtual give-away prices.