Opportunities in an age of disorder

In a recent article, ‘The world economy in an age of disorder,’ the respected Financial Times economist, Martin Wolf, observed that ‘when the world system is being overturned, it is dangerous to have confidence in what lies ahead'. He focused on the economic disruption originating from the United States, but there is also military disruption, potentially even more dangerous, emanating from Russia. These developments provide a level of uncertainty for businesses which few CEOs have experienced and for which few MBA courses prepare their students. And it is almost impossible to factor in the consequences of the associated broken consensus on reducing carbon emissions which is certain to cause massive and irreversible damage to the world’s ecosystem and economy.

Despite this background, and the serious risk of a US stock market crash in tech valuations, there are some grounds for optimism about the world economy. The IMF is forecasting some, albeit diminished, growth, there is a fragile peace in Gaza, and European nations appear to be gearing up their ability to work together to deter or control any spread of the Ukraine war. Furthermore, renewable energy costs have passed the tipping point to become lower than carbon-based energy costs which indicates that as power transmission and storage capacity improves, fossil fuel users will be left on the wrong side of history.

All this provides some tangible opportunities for businesses to grasp. This month, at a massive German British Business Summit in central London, over two hundred business people and politicians discussed practical ways to restore a high level of trade between these two great trading nations. Some key objectives that emerged were to reduce the post-Brexit bureaucracy for UK SMEs exporting to the EU, improve access to the deep London capital markets for European companies, and introduce an ambitious European youth mobility scheme. Earlier in the month, AI and crypto were high on the agenda at the UK party conferences. It is a vote of confidence in the UK that US firms are keen to establish new data centres here and this should help the indigenous digital tech industry. This confidence chimes with the IMF forecast that the UK will have the second fastest growth rate in the G7 in 2025. Such considerations lead us to believe that the Labour government's steady progress in stabilising the economy will help it weather the current turbulence and bring sustainable growth. This should enable it to meet some of vital improvements in public services and infrastructure investment that it promised and are urgently needed.