July 21, 2022
After years of geo-political, social and economic unrest, it’s time to take stock. But how do we rise above the discord to build a positive future? That’s the question we posed to our panel of top international journalists at the World Media Group’s latest Smart Briefing. Chaired by Spriha Srivastava, International Executive Editor, Insider, Inc., our guests included William Booth, Bureau Chief, The Washington Post; Faisal Islam, Economics Editor, BBC News; and Jeremy Kahn, Senior Writer, Fortune.
Changes in the post-pandemic world
Srivastava began by asking the panel what they thought the biggest changes had been to the world since the pandemic. The Washington Post’s Booth said the Covid crisis had demonstrated just how unpredictable the world is. “I felt the pandemic would be six to 12 weeks. I thought there would be a booming economy after it was over with so much pent-up desire for products and travel,” he said. Now, with questions around how long military action in Ukraine will continue, a new UK prime minister on the horizon, and the ongoing effects of economic recovery, the future is even more unclear.
Faisal Islam, BBC News’ Economics Editor, believes what’s happening now is the result of multiple overlapping crises with some common causes – the post-pandemic situation, the Russian-Ukraine conflict causing the energy crisis; market crises as a result of debt and rising global interest rates; and a potential resurgence of the unresolved Eurozone crisis. He says the contradiction of public and private high debts, which would normally be dealt with by lowering interest rates, and speculation, which requires high interest rates, is causing stagflation.
Signs of a recession are showing across multiple sectors, including tech. According to Jeremy Kahn, Senior Writer, Fortune, the big US tech companies are doing all their planning based around the idea of a deep recession, reflected through hiring practices and, in some cases, lay-offs. “I think they feel that there’s going to be this substantial downturn, and that’s what they’re preparing for it,” he said. “Certainly, the foot is off the accelerator in terms of any venture investment.”
Srivastava asked Booth whether we were heading for a recession here in the UK. “The government needs to get inflation under control and get the economy going, but one of the biggest issues is the profound labour shortage,” he said. While Britain wants to manufacture again, it’s lacking the workforce required to do. This becomes a huge problem when globalisation is no longer working the way it should do.
The move away from globalisation
Kahn says that globalisation has been forced to take a large step back compared to the pre-pandemic days: “When you see what’s happening with Ukraine, it has only reinforced that there’s a decoupling in the world. It’s not just one world. Yes, there’s still trade but it’s becoming much more balkanised.”
The reality of this can be seen through Booth’s anecdote about the fate of the UK fish and chips industry. During research for a story, he realised there has been rash of fish and chip shops closing as a result of the various crises. “Energy prices are killing them,” Booth says. “They get all their fish from Russian trawlers and the British government is about to slap a 35% tariff on Russia and white fish. Cod and Haddock aren’t available in the English Channel; British fisheries, despite Brexit, aren’t very productive and don’t produce the fish that goes into fish and chips.”
Added to that are issues with sunflower oil coming from Ukraine, and Indonesia blocking palm oil exports prioritising their own domestic consumption. Booth expects these domino effects to have an impact for months or years to come until we sort out a new economic world order.
He suggests one solution may be a return to a more regional economic alliance model, similar to the NAFTA, agreement, which joined the United States, Canada and Mexico. The UK version of that, he suggests, would be the UK plus Europe, Eastern Europe, and some of northern Africa, where each region would specialise in producing a specific commercial output to trade with the others.
The commitment to net zero
When Srivastava opened up questions to the audience, one of the areas of interest around the environment and, in the wake of the current economic and political issues, whether the commitment to net zero had fallen to the bottom of the agenda? Booth said he felt the COP26 commitment to go completely net zero in some economies in such a short space of time was incredible. He said its success, however, was sure to be affected by the economy. “Watch what happens when the price of gasoline goes up five cents a gallon in the United States, then see how good Joe Biden’s word is – or Boris Johnson’s,” he says. “It’s easy to make promises, but whether countries hold towards the vision will be a major story of the next decade or two. It has to start happening and you can do it all in the last week.
A sliver of optimism for the future
So, is there any hope on the horizon? That was the question from another audience member. According to Islam, there’s going to be a big wave of investment, some of it likely to be strategically supported by government. In the UK, which Islam says is not even in the top 20 on the league table of robot density in manufacturing, he sees a huge opportunity for investment.
Booth is also optimistic and points to the advent of the RNA vaccine as a “mini minor medical miracle,” referring to the relatively unproven technology that was used, and how it delivers a template for future medical innovation. “Remarkable techno change will happen where we least expect it and we’re not in such a bad place,” he says.
Islam believes that the current wave of defence spending, could be revolutionary for Europe: “If all of this money that’s now going to defence as a result of Putin can be channelled in the same way it was in Silicon Valley to help the economy, that’s pretty interesting stuff,” he said.
Kahn agrees that there’s a chance for “tremendous investment” in the area of defence, and to help with the issue of labour shortages. “There’s the potential for automation and robotics to accelerate but it takes a lot of money, and it takes time. It won’t solve this problem within a year, but if we come back in 10 years’ time, it might be that the fish fryers aren’t there because it’s all been done by robots,” he said.