In this session, recorded Wednesday 12 January 2022, Tony Danker was joined by Liz Crowhurst (Interim Director – Policy Unit, CBI) and Louise Hellem (Director for Economic Policy, CBI) for a look at the macro picture for firms as we enter the new year. They discuss the latest on covid restrictions and ‘living with the variants’ alongside potential pinch points for businesses to be aware of e.g., ongoing shortages, challenges, inflation, cost of living and energy price hikes.
12 Jan 2022, 3 min read
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Speakers:
- Tony Danker, Director General, CBI
- Liz Crowhurst, Interim Programme Director, Policy Unit, CBI
- Louise Hellem, Director, Economic Policy, CBI
- James Harding, Managing Editor and Partner, Tortoise Media (Chair)
In this session:
Tony:
- Good news: most of our members are coming into 2022 with real optimism. In plans and budgets is growth and investment.
- Question for next quarter is - will tailwinds overcome the headwinds?
- Firms using lots of capacity and energy on immediate challenges: shortages crisis, covid-related self-isolation, economic risks from energy price spikes and inflation. Management teams still wrestling with the short run.
- Facing opposite situation from last summer: last year the messaging was ‘the economy is open’ but pingdemic rendered the economy closed.
- Then at Christmas the measures were liberal, but the message was omicron is a concern – message was shutting down the economy to drive up booster take-up. Hospitality, leisure, travel have taken a big cash-flow hit as a result.
- On Brexit: government have been pragmatic, but Article 16 remains threat – Sword of Damocles – government need to be mindful, and members want this resolved.
- Politicians have not yet gripped broader significance of energy price rises – need to recognise the ‘April effect’ and work on smoothing that hit.
Louise:
- Omicron meant a loss of confidence for consumers - which was particularly blow throughout the Christmas season.
- People do want to go out and spend, if we have confidence with boosters and antivirals, demand will continue to be strong, but right that we have seen financial support from the Chancellor.
- Key economic trends: Inflation, cost of living pressures, energy crisis.
- Recovery is underway – GDP growth of around 5% this year and 3% next year – quite good numbers but there are some risks in near term and on the horizon but also anticipating inflation to rise by 5% by April and only falling gradually after that.
- Other ongoing issues include supply and staff shortages, wholesale and energy cost increases for households and firms.
- Cost of living crisis will be most strongly felt by low-income households.
- Government needs to grip this by protecting consumers and cash-flow support for businesses and in the longer-term, we need greater measures to increase resilience to future challenges.
- Many of the issues are transitory but do have long legs to run.
Liz:
- Topping the inbox: number one member concern remains testing:
- General access to testing concerns have continued into NY period. Message to gov’t to ‘grip’ testing supply issue – critical workers welcome but ‘doesn’t really touch the sides’.
- Also concerns about future provision and end of free tests – particular concern for members. Mass LFTS are a critical part of the toolkit.
- On self-isolation – businesses would welcome further flexibility / 5-day period to help relieve absence related pressures.
- Need clarity from government on review dates to help firms plan.
- On Brexit: so far, not the issue we thought it might be. Keeping an eye on as only 12 days in but now, covid and labour shortages remain the top issues.
