Green shoots of early spring have begun to emerge, that is, for those that have managed to weather storms Ciara, Dennis and…Jorge. As we look forward to summer, it is worth pausing to consider where we are heading economically, in 2020 and beyond, both locally and further afield.
Questions business leaders are asking include: How is my business going to fair in 2020, now ten months out from the end of the Brexit implementation period? Will my supply chain hold up to the pressure of changes in the way we will have to work, and to the new trading requirements? How will I meet the skills gaps which will inevitably arise from the end of free movement? All of which are perfectly reasonable considerations.
When the UK formally left the European Union on 31st January 2020, the attention of the global economy was beginning to turn towards the prospective out-workings of the implementation agreement, and the 11-month transition period. Now, the threat of a potential pandemic in relation to ‘Novel Coronavirus’ (‘Covid19’), which emerged in the economic powerhouse that is China seems to be impacting across all regions. The personal and economic impacts of this threat are beginning to have a significant ripple effect.
If there is one thing that global markets do not enjoy, it is uncertainty. Whilst we had much political uncertainty in 2019 in the run up to Brexit, which caused high volatility in the markets, this has now been displaced by fears surrounding public health, and indeed the regular updates from the World Health Organisation.
Accordingly, we have seen the global markets react with even more adverse shocks, as Coronavirus fears continue to grip investors across the world. Britain's top index, the FTSE 100, has just reported its worst week since the 2008 financial crash. Further, the OECD has cut its growth forecasts for all major economies.
So, what does this all mean for us in Northern Ireland? Needless to say, the ongoing uncertainty is set to continue to bring, market volatility and economic pressures. The supply of goods will be affected, especially those relying on goods incoming from China. Large events are being postponed, including Ireland’s Six Nations game with Italy, and more widely, tourism will inevitably be adversely affected. Shops are beginning to run low on product from China, and dairy exports from Northern Ireland have been disrupted, with orders cancelled. Some firms are even advising employees to work at home to minimise its transmission, part of the government’s advice for its ‘containment phase’. As firms count the cost, they will likely ponder whether they are too globally exposed to such events.
It is difficult to predict how 2020 will play out in economic terms, but what is clear is that the downside risks to growth are gathering pace. Business leaders may not have all the answers, but they must focus on the things they can control and stay agile as new information emerges.