November was a busy month for the team at CBI Economics, starting with a range of events at the CBI’s Annual Conference in November, the theme of which was ‘Build Back Better’. Our Chief Economist, Rain Newton-Smith, hosted a panel session reflecting on the impact the current health and economic crisis has had, and reflecting on what it means for the future. If you missed the session you can access the content online: As the dust settles.
Unsurprisingly, the economic outlook was a hot topic at the annual conference with the CBI Economics team hosting a roundtable with a range of journalists. The session touched on the CBI’s spending review submission and our latest survey partnership with Ipsos Mori, looking at which business trends from this crisis are likely to stick. Both pieces were launched alongside the CBI conference.
Back in September, the CBI also partnered with the London School of Economics Centre for Economic Policy, to run a survey looking at technology adoption through the crisis. Both pieces were an excellent collaboration, demonstrating the power of the CBI’s survey capabilities and the impact we can have working closely with partners. These insights are now shaping the CBI’s on-going economic thinking and policy work.
Later in November, we saw the Chancellor announce the outcome of his Spending Review. It’s worth briefly reprising the key pillars of the CBI’s own submission:
- Job creation and investment in our people
- Investment in innovation and the transition to a low carbon economy
- Following through on large-scale infrastructure investment, nationally and locally.
The underlying message from the CBI is that despite the near-term pressures and the need to respond to an evolving economic crisis, the government must not lose sight and focus on what is needed for long-term sustained economic growth.
In the CBI’s response to the Spending Review, we concluded that the overall tone of the Chancellor’s speech was largely positive for business, reflecting many of the funding commitments the business community has long been calling for. Businesses will be pleased to see a new infrastructure bank has been created, something the CBI called for in its submission. There is also some greater clarity on the future of R&D funding in the UK, though more still needs to be done next year.
Alongside the detailed spending allocations made by the Treasury for 2021/22, the Office for Budgetary Responsibility provided an update on their view of the economic and fiscal outlook. Their central case showed the UK economy shrinking by 11% overall in 2020, the largest single year drop in over 300 years. They also updated the nation on the fiscal cost of this crisis so far, £280 billion this year, with total government debt topping 100% of GDP for the first time since 1960. The CBI’s November Economy in Brief summarises the other key data and economic insight we saw this month. In December we will also be publishing our own forecast for the UK’s economic outlook over the next two years.
This undoubtedly leaves the Chancellor with a challenging mountain to climb as he looks to the Budget next year, and yet another Spending Review before 2021 is done. Bringing the public finances back to a sustainable footing is likely to be a multi-decade societal challenge. Meanwhile, progress needs to be made on critical areas of policy, from delivering net-zero by 2050 to addressing the ever-lingering productivity puzzle, and levelling up our poorest regions across the UK.
Whilst the cost of the current health and economic crisis cannot be underplayed on lives and livelihoods, there may yet be a reason to be optimistic. The huge public spending programme in response to the pandemic has safeguarded thousands of jobs, and has been a lifeline to many firms. The news of a vaccine could signal a turning of the tide in the spread and control of the virus, and the economy will benefit in kind.
The future of economic policy in the UK will need bold thinking, compelling evidence and insight from across our economy. Economic analysis will have a pivotal role to play in both the short and longer term challenges the UK faces, and will be at the heart of the CBI’s on-going advocacy work on behalf of our members.
But we are also keen to work even more closely with businesses to support their growth and investment in the coming years. CBI Economics can not only provide you with the latest economic intelligence from our surveys and forecasts, but we can now work in partnership with you on bespoke economic analysis to support your specific needs. To find out more about CBI Economics and the services, you can either email us or visit our website.