The Monday Briefing
A succinct and eclectic weekly take on economics and finance from Ian Stewart, Deloitte's Chief Economist in the UK
Brexit, the first year
Brexit proper, the UK’s departure from the EU’s single market a year ago, passed without major incident. Borders continued to work and lorries kept moving.
Yet beneath the surface Brexit is reshaping patterns of trade. What happened at our borders is a metaphor for Brexit as a whole. There have been significant effects, but the most dramatic, and headline-worthy, predictions on both sides of the Brexit argument have not been realised.
In the event of a vote to leave the EU, the Treasury forecast an “immediate and profound economic shock causing a recession and a steep rise in unemployment”. The leave vote was a profound shock, but a political one. Growth continued at a decent pace after the referendum, unemployment fell further and UK equities rose.
The global economy in 2022
2022 should be the year in which the developed world learns to live with COVID-19. High levels of vaccinations have helped weaken the link between case rates and deaths in richer countries. Despite spreading at lightning speed and generating record case rates, the Omicron variant has been less damaging to health than previous waves.
Going for growth
A personal view from Ian Stewart, Deloitte's Chief Economist in the UK. To subscribe or view past editions google 'Deloitte Monday Briefing'.
Omicron economics and our Christmas reading list
Christmas quiz
Our Christmas quiz covers an eclectic mix of topics, many related to economics and business. The answers and a brief explanation of the factors at work are below each question.
Omicron assessed
It will take weeks to establish how great a risk the Omicron variant poses. The hope is that, like the Beta (first documented in South Africa) and Gamma (Brazil) variants before it, Omicron will fail to become dominant. Those earlier variants were unable to outcompete the Alpha (UK/Kent) and now the dominant Delta (India) variant.
A slower-growth China
A New Winter of Discontent? Join us for a webinar this Wednesday morning where I’ll be discussing with a panel of Deloitte specialists, along with Jaguar Land Rover’s finance director, Chris Tye, whether rising inflation, supply bottlenecks and labour shortages mean we are heading for a new Winter of Discontent.
Timing: Wednesday, 24 November 2021, 08:30-10:00 GMT
Register at: https://deloitte.zoom.us/webinar/register/WN_oJT4MeihSA6gSlgBFHVAKw
Interest rate rises, slowly does it
A year, to paraphrase Harold Wilson, is an eternity in economics. This time last year inflation was on its back and Central Banks were fretting about the risk of deflation. Now Central Banks have the opposite problem, with supply shortages and energy prices propelling inflation to uncomfortably high levels. As with so many trends, good and bad, America leads. Last week financial markets were shaken by news that US inflation had risen to 6.2%, the highest level in 30 years.
O worker, where art thou?
A New Winter of Discontent? Join us for a Deloitte Academy webinar where I’ll be discussing with Deloitte specialists, Raoul Ruparel and Jurga McCluskey, and Jaguar Land Rover’s finance director, Chris Tye, whether rising inflation, supply bottlenecks and labour shortages presage a new Winter of Discontent – and what organisations can do about it.
Timing: Wednesday, 24 November 2021, 08:30-10:00 GMT
Register at: https://deloitte.zoom.us/webinar/register/WN_oJT4MeihSA6gSlgBFHVAKw
From neo-liberalism to neo-statism
Last week’s UK Budget was one of the most consequential of recent decades. The small state, low tax approach of successive Conservative chancellors has gone into reverse. This is a policy choice, not something forced on the government by the demands of the pandemic. The government has made a decision to opt for a bigger state funded by raising taxes’ share of GDP to the highest levels since the post-war Atlee government.
The ripple effects of electric vehicles
Mass adoption of new technologies creates ripple effects across economies and societies, often in unexpected ways. British time had to be standardised across the country in the early nineteenth century to create national timetables. The car paved the way for America’s population to shift from cities to the new suburbs. Standardised shipping containers collapsed freight costs and helped spur the globalisation of the last half century.