What did we hear at the Wright Hassall – HSBC economic briefing?
Author: John Giles - Divisional Director, Promar International
What was it that drew me to the Ricoh Arena in Coventry on 11 April 2019 for this event? I have heard Mark Berrisford-Smith, the Chief Economist of HSBC speak before. I know some of the people at Wright Hassall of old. And I have been to the Ricoh Arena on a number of occasions to watch Reading play. It’s a great venue.
Maybe it was a combination of all three – but on none of them was I disappointed. Mark was in terrific form, as he always is, and gave us a run down on how he thinks the UK, European and global economy will fare over the next 12 – 24 months. Amongst the more pertinent things he had to say were as follows:
• The seven-month extension time for Brexit might work in our favour as it will give additional time to think out what we really want from the process overall and decisions can now be made in a less pressure cooker environment – hopefully!
• Other things that might happen - such as change of Prime Minister or even a general election still cannot be ruled out though
• Reaching any compromise between the Labour and Conservative parties will still be hugely difficult, as they are starting from very different points of view on the “end game”
• We are probably closer to a Customs Union than many of us realise – this option was only defeated in Parliament by a very small majority in the recent indicative votes that took place
• Overall, the UK economy is still performing pretty well at 1.5% overall growth and countries such as Italy, Germany and Japan all look to be in a less favourable position. This can be attributable largely to a global slow down in manufacturing and the tech industries and less favourable demographics in these markets which has seen the level of economic growth slow
• In the EU, the Spanish economy has been performing much better of late with levels of unemployment falling quite quickly
• The slow down in car purchases in China was in many ways predictable, after a period of booming demand, but this impacts on other SE Asian economies such as South Korea and Taiwan who are strongly linked to the fortunes in the Chinese economy per se
• The prospects for a resolution to the US – China trade war look reasonably good and in terms of other trade disputes, this is the one that really counts to sort out – the impact of the EU – US trade issues is relatively small, in comparison, but an going problem between China and the US could impact on up to 60% of the worlds developed economies
• In the UK, business and consumer confidence have still been damaged by the build up to Brexit, but the economy is still growing even if this has been in response to the build-up of stocks in the lead up to 29 March and the increase in both import and export activity that preceded this
• If a deal can be “got over the line” in October, it is likely that both industry and consumers will see some sort of post Brexit “bounce” at least in the short term and the economy in the UK will still grow by c. 1.5%
• In terms of trade deals – the likes of Australia and NZ will want to do these with the UK, but will look to secure the relationship with the EU 27 first
• Dealing with the WTO will be easier said than done – the organisation is full of what were referred to as “tough sharks”
• The EU don’t want a No Deal – but are getting impatient with the UK
• For the food sector, getting a deal is critical looking at the inter dependence of the UK market on the rest of the EU for imports and then the importance of the EU for UK agri food exports
• UK exports could benefit from a weaker currency in the future, but this will be countered by higher priced imports and then the issues of the costs of “trade friction” and a slow down in the world market per se.
I think that’s about it! Mark makes it all sound very logical and clear – quite a feat, bearing in mind the range and complexity of the subjects he touched in a relatively short space of time.
What else? A good crowd there of several hundred made for good networking opportunities - some in agriculture and food and some not (but you never know when you might need to access them). A full range of bacon sandwiches and sausage rolls made the trip up from Berkshire well worth it - and more. I would travel much further than this to hear Mark speak. So should anybody. And all at a great venue. Eventually back home for 11.30 and then to the rest of the day’s activity. All in all - a morning well spent.
About the author
John Giles is the current President of the food, drink & agriculture group of the CIM and can be contacted via email.