It has been an odd February, and for this edition of the Chamber meeting, we can declare the Beast from the East is dead. Having battled through the snow a month earlier, we could have easily worn t-shirts as we took a morning trip just over the border to Bexhill to our members Park Holidays’ spacious and comfortable offices. Our grateful thanks to Marguerite and her team for hosting our sell-out event.
In conjunction with the Institute of Directors, we invited an agent from the Bank of England, Andrew Holder to talk to us. His role within the Bank is to look at the South of England, and how that affects the Bank’s overall outlook for the UK economy and translates the voice of our business communities.
The biggest takeaway from the presentation, he laid out a fairly, perhaps, surprisingly for some, bullish potential for the future, when talking past the headlines around inflation and exchanges rates, and being straight about how the UK economy was doing.
Despite a variety of short term fluctuations with the markets since the vote, growth in the UK has been more resilient than expected, with growth holding as ‘businesses just got on with things’, with only the weather making a significant impact last year. However, like any well-trained economist, there is always a caveat, it has softened recently with the uncertainty of the UK’s Exit from the European Union, as he told us that the figure has slowed down in this quarter and is predicting the next quarter will continue this trend.
One of the challenges that we were not surprised to hear is that business investment has seen a downturn. The market is more careful, more diligent, and companies are not making the key driving investments and pausing their bigger moves. Holder did warn, in a rare moment of certainty, that if you are a company vulnerable to different trading conditions it would be wise to wait a few more months. For others though, with the conditions as they are, ‘capital is available, loans are available’. His overall view is that it has been a good time to invest in spite of world trade slowing down and the never-ending uncertainty.
He explained how each element of inflation, wage growth and employment are all connected, and that the best way to see things is not in isolation, and that for benefits there are also challenges. They are ‘keeping their eye on’ wage growth, which they expect to continue to remain ‘well-behaved’; although noting there is not much slack left with unemployment at record lows, so any sustained recruitment problems may feed through to pressure on wages.
While it has been great that employment has been as low as the 1970s for job seekers, Andrew Holder said that in his discussion with businesses, ‘getting hold of new, experienced staff members is their greatest challenge’ across the country, and not just strictly in manufacturing, as this trend has started spreading into different sectors. However, this is not as big as a problem as it appears, with supply and demand have been keeping toe to toe with continued growth, and respectable forecasting for productivity to rise over current standards. Drawing from a well-placed question from one of our chamber members, he admitted that productivity and difference in work culture are going to be a bigger issue in the next few years than the current political ones, and that they will have to work on different ways of evaluating the current economic landscape to help businesses take this on.
As ever the future presents a lot of variabilities, and there can only be assumptions (understandably). Contingent on a smooth exit and transition period, their forecasts and models suggest a bit of recovery after a small faltering in growth. ‘If people act as they did in 2016, it would not be as nearly so bad’ he said, focusing on the fact it is still uncertain. With his admission of this uncertainty, we can at least try and draw comfort that businesses are not the only ones who have to think long and hard about the direction.
On a lighter note, next month we are lucky to have the head of SELEP Adam Bryan, talk about the future of infrastructure, strategic planning and their ambitious vision for the South East and particularly Hastings. As Andrew Holder was alluding to, we cannot stop doing business, and as such, Adam Bryan will show us what the future has in the offing.