Director’s update: Globalised Economy

When I look back at my last quarterly update there was a sense of positivity for a post Covid future - pushing forward FTAs, boosting domestic exports and realising Global Britain.  Roll forward 12 weeks and we’ve watched with horror events unfolding in Ukraine, supported the government whole heartedly on it’s response and are now looking to the knock on implications in 2022 and beyond.  The humanitarian crisis will only increase and members have really gone above and beyond, working with Lord Bilimoria and his team – thank you!!  Moving from one crisis to another, covid – Ukraine – oil and gas.  We need to deal with today, whilst planning for the future.

Renewed focus on Economic Resilience

• Covid and the crisis in Ukraine have shown how dependent our domestic economy is on global supply chains.  It has also shown how little government (and many businesses) understand the complexities and interdependence involved.  CBI have been helping government understand the issues many firms are facing in decoupling from Russia and championing all those able to go beyond the sanctions.  The situation raises the question of how to reduce the risk of geopolitical tension affecting trade and supply chains in the future.
• It has also reemphasised the importance of having an international strategic approach to deliver our domestic economic vision.  Partnerships with allies and developing nations will be essential to greater resilience and we are already seeing action with the relaxation of US 232 steel tariffs and an increasing focus on Indonesia (nickel).
• The CBI is back with it’s bifocal lens, pushing for immediate support on energy, business confidence and investment whilst shaping government priorities for the next phase of work.  All countries will still be focused on stimulating growth, particularly countries less impacted by energy prices (US).  The UK needs to commit to a vision of a future focussed competitive economy with resilience baked across plans be that commodities, cyber or people.

Your insights are essential (please get in touch)

• We saw in 2021 the impact of increasing energy costs when CF industries halted its UK fertiliser plans. Increasing gas, oil and commodity prices will affect domestic industries and supply chains, particularly EIIs and SMEs. They will also have a significant impact on supply chains in developing markets. There will be an extent to which increased costs can be passed on but understanding where the spikes are and how this affects cash flow and future investment plans will be essential.
• The Critical Minerals Strategy (CMS), due to be published later this year, will add to the impetus but much more important is how government and industry can turn a strategy into a resilience action plan.
• Please reach out to the team if you have specific concerns around the CMS or are planning your own resilience in this space, we would welcome your insights. 

China and Indo pacific still a focus

• Next week is your opportunity to hear from our man in Beijing, Guy Dru Drury.  His webinar on 31^st March comes as the first test flight between the UK and China takes place, a joint UK- China Economic Financial Dialogue comes back on the table and their Zero Covid policy changes name.   Whilst it is clear from the Shenzhen lockdown that China is still far from opening up ,the pressures on Ukraine and the push for resilience is turning attentions once again to China shores.
• As a counterweight, India and the Indopacific is still the prime focus for government.  With India and UAE both abstaining from UN votes condemning Russia, expect increased attention on trade negotiations in Parliament and from NGOs. Trade market work in the wider region is largely focussed on clean growth, regulations and standards and our Head of Group for Climate policy, Tania Kumar’s visit to India this week will inform our focus.