- Saturday, April 27, 2024
By: Sarwar Alam
A MEMBER of the Bank of England’s (BoE) monetary policy committee said UK businesses have reasons to be “optimistic” over future growth.
Dr Swati Dhingra said she believes the UK has “come out of the worst of the inflation and cost of living crisis” and the country will return to growth in the next five to seven years.
In a panel discussion at the Asian Business Awards last Wednesday (22), she said, “Let’s just put it in perspective. This is one of the biggest shocks we’ve seen in almost a couple of generations. It’s going to take time to come out of it completely.
“Going forward, some of the effects from the interest rate increases you’ve seen in the past, which happens to be one of the fastest and most intense rate hiking cycle since independence of the Monetary Policy Committee… what we expect to happen is about half of those effects on economic activities are still to come through, but it also means the impacts on inflation have still to come through.
“Hopefully the cost of living crisis will abate, but there is going to be slow growth all through the next year.”
Dhingra was speaking alongside Vitabiotics CEO Tej Lalvani, OakNorth bank CEO Rishi Khosla and hotelier Surinder Arora at the event in London.
She mentioned her work with the London School of Economics and the Resolution Foundation to create policies that will see the UK recover from “almost two decades of stagnation”.
“We are going to devise a policy which applies to not just one thing like trade or investment, but a comprehensive economic modelling which ensures that businesses have the stability and reason to invest in the country,” she said, adding that the various political parties have started putting forward their thoughts to the project.
“I’m encouraged by the data, which shows we’re really quite good at some things, like the UK is the second-biggest services exporter in the world. And that’s really punching above our weight in terms of the world economy.
“I’m encouraged. I know I am not supposed to be encouraged and I’m supposed to tell you that there is a cost of living crisis looming, when actually beyond that crisis, there’s some reason to be optimistic.”
In last Wednesday’s autumn statement, chancellor Jeremy Hunt announced tax cuts for workers and gave businesses permanent investment incentives to try and speed up the economy.
The business tax break, known as “full expensing”, is a capital allowance scheme that allows firms to deduct 100 per cent of the cost of qualifying plant and machinery from their taxable profits. The move would boost annual business investment by around £3 billion a year, forecasts from the OBR [Office for Budget Responsibility] said.
The state pension will rise by 8.5 per cent from April and universal credit will go up by 6.7 per cent, Hunt added.
Responding to the news from earlier that day, Lalvani said, “It’s a difficult time for all of us at the moment. It’s hit some people harder than others, but I think there’s optimism that the government’s trying to do what it can.
Lalvani, who heads the UK’s largest vitamins company, said, “It’s not going to be an overnight fix. People need to understand it’s going to take a long time before things get better.”
Khosla, meanwhile, reflected on last year’s autumn statement which was overseen by former prime minister Liz Truss and had a disastrous impact on the UK economy.
“Last time this year, we had quite a bit of ‘excitement’ with the autumn statement. The fact that we didn’t have that type of excitement this year is a blessing for the country,” he said. “I think it was incredibly good (Hunt’s statement). The thoughtfulness around measures to spur growth for business is very strong. It will bring stability and is positive for business.”
Arora, founder and chairman of Arora Group, was also optimistic about the future as a result of the autumn statement. He said Britain was “heading in the right direction”. The Arora Group continues to invest in the UK and recently bought the Heythrop site in London from Zenprop.
The 2.7-acre site, just off Kensington High Street, currently has consent for a 320,000-sq ft, 142-apartment senior living scheme. The group, which controls more than 7,000 hotel rooms and has assets under management of more than £2 billion, is expected to seek a change of use to the existing permission, with the site having “potential for a number of different schemes”.
Arora cited his experience of going through the financial crisis of 2008 for helping him through the economic downturn that the country has experienced in the last few years.
“We learnt from the 2008 financial crisis, because at that time, we did really go through a lot of tough times with the lenders,” he said.
“My late mom used to say, ‘some make mistakes, and then there’s other people who learn from them.’”
He also paid tribute to his fellow panel member Khosla, whom he had first met at the Asian Business Awards.
“I actually met Rishi the first year he started OakNorth, in this very room. A few weeks later our teams met and he said, ‘you should do business with us’,” said Arora. “I did the typical Hindustani thing – ‘what’s the interest rate, what’s the charges?’ I said, ‘you’re too expensive, not interested’.
“I said to my CFO afterwards, ‘I really see something different in this man. I think we should invest in the company’. We did our first deal about three or four years ago and we are still working together today.”
