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UK faces economic shock as big as the war

The UK is facing an economic shock “as big as the war” but can emerge from it with a better outcome, a leading economist told an online conference.

Greater Birmingham Chambers of Commerce staged its annual Global Trade Conference examining a range of issues, including those provoked by the Covid-19 crisis and Brexit.

The conference, sponsored by Birmingham City University, DykeYaxley and Lemonzest, was hosted online from the Chamber’s headquarters in Edgbaston by chief executive Henrietta Brealey and Mandy Haque, director of the Chamber’s international business hub, and featured talks from a  variety of regional and international bu iness leaders and politicians.Joe Brusuelas, chief economist at global accounting firm RSM, was speaking in a joint presentation with his colleague Simon Hart, international partner at RSM, on the global economic impact of events in the past year.

Addressing whether the Covid-19 pandemic had masked the impact of Brexit, Mr Brusuelas said: “My impression is that the pandemic brought forward a lot of the Brexit issues that you would have had over a number of years into just 15 months. The UK economy has gone through the biggest shock than it has in a couple of centuries.

“This is as big as the war and the data sometimes says it’s worse. There are going to be some real challenges but one gets the sense that Brexit is in the rear view mirror.  I think that’s a good way to rediscovering the UK economy and re-imagining UK firms in the post-pandemic situation. But tensions will go away.

“This is starkly different from what we saw in the great financial crisis and you are going to get a better outcome. Fresh diplomatic initiatives will smooth out some of the tensions - simply because it’s in everybody’s interests to do so.”

Mr Hart said: “There is no doubt that Brexit has had an impact on the UK economy. It has been masked by the pandemic and maybe that’s not a bad thing in many respects. There will be an on-going evolution of the relationship.”

Both felt that there was going to be a post-pandemic boom in global activity but the ability of businesses to recover from the constraints on production during the crisis was critical. 

Mr Brusuelas said: “As we emerge from our cocoon we are going to see a burst of economic activity. This was a once-in-a-100-year event and the recovery will largely be led by households and business who are trying to pull forward about 10 years of technology to prepare to compete in a hyper-combatable post pandemic economy.

“Until we get about 60 per cent of the global population vaccinated we are not going to get the pre-pandemic economy back. Until we do you should expect to see twists and turns but the direction will be up. It might be one step forward one step back for a while.

“In some of the Government institutions we seem to be going through cold war planning and the difficulty of getting supplies from overseas has been quite pronounced as businesses re-evaluate their supply chain risks.”

In the same session, Yael Lempert, the US Embassy chargé d’affaires, said the US administration is “going to be highly focussed on strengthening the relationship between our countries and encourage companies to flourish on the global stage”.

She said: “We want foreign companies to be able to flourish and succeed in our market – the biggest consumer market in the world. We are not afraid of competition – we welcome it. And that’s a point we have made repeatedly. We want to see a level playing field and we want that to bring benefits to all.

Ralph Goodale, high commissioner at the Canadian Embassy, told the conference’s global  audience that Canada and the UK have “an extraordinary relationship rooted in hundreds of years of shared history”.

UK international trade minister Graham Stuart MP, who delivered a keynote address at the conference, acknowledged the West Midlands as the historic “workshop of the world”.

He described the region’s thriving businesses and entrepreneurial spirit as well-positioned to make global demand and ensured his department's commitment to helping those businesses grow through export.

Having recently reached a free trade agreement in principle with the Australian Government, Mr Stuart was confident that the region will benefit largely from the removal of tariffs and the trading of iconic products such as cars and ceramics.

Mr Stuart expressed his pride in the region, saying: “I am proud to have seen so many businesses from the West Midlands seize the opportunities presented by our position as a newly-independent trading nation. I’m excited for the moments ahead that will enable us to showcase your businesses to a global audience.”