This is my favourite time of the year for writing a comment piece as I am not confined by current events instead I am able to look back on the last twelve months, and try to predict what the next twelve months will have in store for UK PLC, the main caveat being that I am not a soothsayer nor am I an economist. In the immortal words of Albert Einstein, ‘If you want to know the future, look at the past’.
This comment piece has been prepared using the tools of my trade, which in short are many conversations with my corporate clients to better understand the issues they face on a daily basis, thereby allowing me to frame the contents of this comment piece.
Without wishing to sound like a weather forecast, I genuinely do feel that the next twelve months will be much of the same with improving prospects. The reason for this is that we have not yet navigated our way out of the downturn and pay disputes are still on the rise, fuelling inflationary pressures and the thunder of industrial unrest is still rumbling through the economy.
It is clear that the transient inflation has now whipped up into a storm, causing wage inflation but the prospects of hitting the rocks of unemployment for the majority of the workforce still does not seem a reality as one thing Brexit has taught us is that there is still a demand for talented skilled labour.
No one can predict how or when the war in Ukraine will end or whether the relaxation of the zero Covid policy adopted by China will lead to a new strain of Covid and further worldwide restrictions. However one thing is for certain, as with any extreme weather, provided you batten down the hatches and prepare for the worst, there is an opportunity to mitigate the devastation caused.
The depression sitting over the UK economy means that there is an unavoidable recession in the same way that when there is a storm there is rain. The smart money is ensuring that more resilience is built up within businesses through continued investment despite the higher borrowing costs as inevitably the investment should lead to productivity gains. But what is not clear is whether or not the new shift in working patterns will absorb those productivity gains such that they will not translate into higher GDP for UK PLC when the storm clouds have moved on and brighter skies appear in 2024.
Rishi Sunak’s promotion from Chancellor to Prime Minister may mean that he is now in a better position to deliver on Big Bang 2.0, which if he can get right, will be a gamechanger for UK PLC and will help make the UK economy more resilient to future inevitable cold fronts affecting the economy. The only problem with this is the forthcoming election within the next two years and the uncertainty of whether Rishi will still be Prime Minister or the Conservatives still in control of the direction of travel for the UK economy.
