‘Global cooperation is key to addressing our shared challenges as we emerge from the pandemic’
Chancellor Rishi Sunak stressed the importance of nations working together to tackle supply chain issues at a meeting of G7 (Group of Seven) nations in Washington last week. The meeting of finance ministers and central bank governors discussed the importance of ensuring that global supply chains become more resilient.
Mr Sunak’s statement read, ‘Global cooperation is key to addressing our shared challenges as we emerge from the pandemic. From global tax reform to global supply chains, we must work together to seek international solutions for the benefit of our citizens at home.’
Supply chain problems were evident at the Port of Felixstowe last week. The port, which handles 36% of the UK's freight container traffic, reported a logjam of shipping containers, due to a combination of driver shortages and ongoing effects of the pandemic in the busy run up to Christmas. Meanwhile, President Biden announced plans to keep the Port of Los Angeles open “24 hours a day, seven days a week,” to relieve pressure on an overworked supply chain that has grown into a major economic problem for the US.
G7 presents a roadmap for systemic economic reform
In a report entitled ‘Global Economic Resilience: Building Forward Better’, published on 13 October, the G7 Economic Resilience Panel set out a roadmap detailing how the G7 nations should work together to identify and manage emerging risks or coercion. Lord Sedwill, Chair of the Panel, said, “Economic resilience is delivered by diversification, co-dependence and public-private partnerships within well-governed, open and integrated global markets.”
Bank of England will act on inflation
On Monday, the Bank of England Governor, Andrew Bailey hinted that UK interest rates may have to rise but gave no indication of when the Bank might increase rates. Mr Bailey said surging energy prices are another signal that the Bank will “have to act.” The next rate setting Monetary Policy Committee (MPC) meeting is scheduled for 4 November.
Office for National Statistics (ONS) figures released first thing on Wednesday morning show that the Consumer Prices Index (CPI) rose by 3.1% in the 12 months to September 2021.
UK economy grows on dining out and camping
August saw people taking advantage of the first full month of COVID freedoms, boosting the UK economy by 0.4%. This is according to ONS figures released last week, which revealed that the service sector made the most significant contribution to economic growth, growing by 9%, while activity in hotels and campsites grew by 22.9%.
Growth, however, continues to be underscored by concerns about ongoing supply chain disruption and labour shortages. Darren Morgan, Director for Economic Statistics at the ONS, commented, “The economy picked up in August as bars, restaurants and festivals benefited from the first full month without COVID-19 restrictions in England. However, later and slightly weaker data from a number of industries now mean we estimate the economy fell a little overall in July.”
Global Investment Summit
The UK’s Global Investment Summit began on Tuesday at London’s Science Museum, with the Prime Minister announcing 18 new trade and investment deals worth £9.7bn, which will support green growth and create an estimated 30,000 UK jobs. One such deal sees the UK government partnering with Bill Gates in new technology to reduce emissions. Boris Johnson said, “This is just the start. We will see new partnerships for green growth forged at today’s Global Investment Summit, as we look ahead to COP26 and beyond.”
With commodity issues weighing on global markets, investors continue to anticipate inflationary pressures, amid labour shortages and supply chain issues. As speculation intensified around the chances of a potential UK interest rate hike, the FTSE 100 and 250 drifted lower on Monday, but repaired any losses on Tuesday as investors digested signs of a robust start to the latest earnings season.
National Bureau of Statistics figures released on Monday, show that during Q3, China’s economy expanded by 4.9%, the nation’s weakest pace since Q3 2020. Significantly slower than the 7.9% rise in Q3, and below analyst expectations of a GDP 5.2% increase. The weak expansion news sent Asian stock markets momentarily lower as concerns about the world economic recovery returned to the fore.
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