In this episode, recorded 16 March 2022, the CBI's Chief Economist, Rain Newton-Smith, is joined by Caroline Bain (Chief Commodities Economist, Capital Economics) and Mark Wilson (Health, Safety and Environment Director, Offshore Energies) to discuss global supply chain disruption to commodities and energy and what businesses need from the Chancellor is his Spring Statement next week.
16 Mar 2022, 3 min read
Watch the webinar
Speakers:
- Rain Newton-Smith, Chief Economist, CBI
- Caroline Bain, Chief Commodities Economist, Capital Economics
- Mark Wilson, Health, Safety and Environment Director, Offshore Energies
- Ceri Thomas, Editor and Partner, Tortoise Media (Chair)
In this session:
Rain Newton-Smith
- The CBI has been working with Ukrainian ambassador on coordinating donations and considering how businesses can support refugees and employment opportunities.
- Firms have also been implementing sanctions and directing businesses on how they can get further information. Divesting away completely from Russia is complicated: businesses will have a duty of care for employees in Russia, and others are supplying medical products and other essential items.
- What does it mean for UK economy? Energy prices and commodities are going up - we're a globally interlinked economy - Ukraine and Russia big exporter of fertiliser, sunflower oil, and other commodities.
- What does it mean for individual households in the UK? Cost of living will remain a big issue this year.
- Looking ahead to the Spring Statement, the CBI is continuing our messaging on growth. Heard promising words from the Chancellor during this Mais Lecture around driving long-term growth and productivity. Time to be bold not cautious.
- When it comes to business resilience right now: firms should think about their cash reserves, and don’t re-treat from investment plans - continue to take a long-term view
Caroline Bain
- Commodity prices - energy prices are high, and most commodity production is quite energy intensive, so production costs have also risen in that regard.
- For example, nickel market re-opened this morning after being closed for several days - and it's down quite sharply. It's an example of the volatility we're seeing.
- Europe has always been aware of risks and exposure but continues to be huge uncertainty about the supply of many commodities this year.
- Still reliant on oil and gas in the near-term.
- Tired of using the word unprecedented – but there are few parallels to draw on. We already had severe supply chain issues because of the pandemic.
- The one parallel is that oil price shocks in 1970s - stayed high after the shocks. Likely to be the case here - not a short, sharp shock.
Mark Wilson
- Global energy perspective - lots of discussion around supply and demand. Sector has also been looking at how we increase production and balancing that with medium/long term aspiration of renewables.
- Key that we should accelerate investment in renewables (£16bn needed) - hydrogen, CSS, electrification, offshore and floating wind - still very much focused on net-zero. But simply cannot turn oil and gas off overnight.
- Renewables can be a commodity produced in the UK and increase our resilience.
- Right now, it’s important that Chancellor works to generate investor confidence so we can move into renewables and keep moving forward on the decarbonisation transition and maintain competitiveness.
