ALEX BRUMMER: There should be optimism that an economy that is as flexible, innovative and creative as that of Britain’s will recover lost ground
- In a matter of weeks, Britain and the world have moved from the ‘roaring twenties’ to the ‘winter of discontent’
- Even Chancellor Rishi Sunak acknowledges that shortages facing the economy are ‘very real’
- The notion that this is a ‘Made-in-Brexit’ crisis needs to be challenged
In a matter of weeks, Britain and the world have moved from the ‘roaring twenties’ to the ‘winter of discontent’. Even Chancellor Rishi Sunak, in his interview with the Mail acknowledges that shortages facing the economy are ‘very real’.
The notion that this is a ‘Made-in-Brexit’ crisis needs to be challenged.
Maybe the shortage of HGV drivers, including those driving tankers, might be less acute were there more visas.
Economic shock: Chancellor Rishi Sunak acknowledges that shortages facing the economy are ‘very real’
Also to be considered are Covid-19, the hold-ups at DVLA in testing new drivers and the lack of foresight by hauliers, who like to blame everyone else.
In March 2020, as the pandemic spread across the globe, the International Monetary Fund described the downturn in the world economy as ‘a crisis like no other’, downgraded its output forecast by 6.3 per cent from January 2020 to minus 3 per cent and declared it be the biggest hit to the global economy since the Great Depression.
The impact of that on shipping, global power generation, commodities and manufacturing was enormous as large parts of international trade infrastructure were mothballed. The world economy did bounce as vaccines gave us all hope. It is easy to forget that in the second quarter Britain’s economy did expand by an unexpectedly strong 5.5 per cent. What we have learned in the last month is that bringing the global economy back to where it was in 2019 is not an overnight job.
European gas prices surged in latest trading as shipments of liquid natural gas were diverted to China. In Germany and across the EU, the latest IHS/Markit survey shows that manufacturing – the locomotive of German output – is hamstrung by supply bottlenecks and rising prices leading to a fall in the index to its lowest level in eight months.
In the US, President Biden’s infrastructure spending is caught up in a Congressional quagmire. Biden has already been defeated on his plan to soak the rich to pay the bill. None of this will be very comforting to commercial drivers and ordinary motorists stuck in petrol queues and fearful about not being able to get on with work commitments. The winter will be difficult with global energy prices bubbling away, as Russia, through Gazprom pipelines, and Chinese demand disrupt markets.
After the prolonged Covid economic shock, the ‘coiled spring’ of recovery jammed and loose talk about fuel deliveries created unnecessary chaos.
Supply bottlenecks have become the new wrong-kind-of-rain for companies, from Wetherspoons to online electrical group AO posting disappointing financial results.
In a trading nation as open as the UK, global factors will always have a big say. Nevertheless, there should be optimism that an economy that is as flexible, innovative and creative as that of Britain’s will recover the lost ground.
Want to know what is next for Morrisons if Clayton, Dubilier & Rice (CD&R) wins the Takeover Panel-sponsored auction?
Take a look at the front cover of weekly business magazine EG, formerly Estates Gazette. It cross refers to an advertisement placed by MFG, the Motor Fuel Group, controlled by CD&R. The owner of 900 garage forecourts is seeking new sites for UltraRapid Electric charging. If the Terry Leahyheaded buyout wins the Morrisons shootout, MFG sites will likely be combined with Morrisons convenience stores, and possibly Morrisons forecourts, and could lead the journey to EV. At least it is a plan.
Much less is known about the Fortress offer, a more financially driven buyer than CD&R. But that will likely make little difference to the compliant Morrisons board.
Its willingness to prostrate itself in front of any buyer means that Andy Higginson and his fellow directors will have little choice but to accept the highest offer, fill their boots and retreat.
As for protecting workers, suppliers, food security and the nation’s tax base, forget it. There is an ambition deficit and moral vacuum at the top. Cheap shot bargain hunting in the foothills of the London Stock Exchange is regrettably in vogue.
No recent deal demonstrates this more clearly than the £1.1billion bid for UK robotics pioneer Blue Prism from private equity sharks Vista Equity Partners.
Rebel investor Coast wants more money and points out that the buyer is seeking to capture the Warrington-based firm at a 40 per cent discount to its January 2021 high.
Given Blue Prism’s tech, R&D and patents, this looks a nailed on case for thorough national interest review.