John Ashcroft is Founder, CEO and Author of The Saturday Economist. In a Q&A ahead of his keynote at The AHC Reimagined, he shares his thoughts on economic recovery, governmental policy and the travel and real estate markets in the UK.
In this first extract, John discusses the economic landscape and the government’s response. The full interview is available here.
As an economist, how is it possible to assess the market and make predictions in this unprecedented landscape?
It is always easy to assess the market and make predictions, the problem is ensuring the predictions have any degree of accuracy. Most forecasters expect economic growth to fall by around just over 9% this year. The shock to output in the second quarter was just over 20%. Analysts assume a progressive return to growth, as lockdown eases and the return to work continues.
It’s not all bad news. Headlines suggest consumers are spending again. The housing market is experiencing a strong recovery. The “Eat Out to Help Out” has confirmed families can be lured back into cafes and restaurants.
So what shape will the recover be? It’s a V, it’s always a V. Economists model the “reversion to the mean”, things return to a semblance of normality, eventually. The problem is, for certain sectors, it may take just a little bit longer than others.
What do you see as the major indicators of the UK’s economic health (or lack of) in the current circumstances?
We watch closely the monthly GDP output figures, with a clear focus on recovery in the key sectors. Consumer spending is under scrutiny, the pattern of retail spending particularly important. For the moment, the numbers appear to be moving in the right direction.
The labour market is the “one to watch”. The headline unemployment numbers suggest little increase in job losses for the moment. Major fears are for the unemployment numbers to increase as the furlough scheme unwinds.
What measures from the Government are having the biggest impact on promoting economic recovery? What more is needed?
Monetary and fiscal conditions are incredibly relaxed. The Bank of England has set the tone with a reduction of base rate effectively to zero.
The Treasury has played a great part in avoiding a total collapse during shutdown. The furlough scheme, payroll schemes, loan schemes, cash schemes, VAT reduction, payment concessions from HMRC all have played a part. The Chancellor Rishi Sunak committed to “Give all the tools needed for businesses to get through this”.
So what more is needed? We would like to see an extension of the scheme up to Easter next year. The number of unemployed will increase to between 2.5 and 3.0 million, with job losses particularly high in those sectors, slow to recover, if the scheme is not extended.
John Ashcroft will give a keynote presentation on 'Cycle, Interrupted: The Economic Outlook’ at The AHC Reimagined on Thursday 8th October. To hear more from John and other expert speakers about the opportunities in the UK hotel market, register here.