Severe risk factors are too great in number and complexity to rely on predictions that point to a swift recessional recovery says RSM. Unlike the Bank of England’s (BoE) recent forecast of a short V-shaped curve, RSM believes a more protracted journey out of recession will reflect a curve more resembling the Nike swoosh.
Speaking at the virtual annual Global Trade Conference, hosted by the Greater Birmingham Chambers of Commerce on Wednesday, Joe Brusuelas, chief economist at RSM, said: ‘There is good news. Economic freefall has ended. Contractions in the economy and in sentiment has slowed. But to suggest that we will see a return to growth at the levels seen at the start of the year in the UK anytime soon is in our view far-fetched.
‘Lockdown, coupled with the biggest fiscal and monetary response since World War Two, wiped out almost two decades of economic growth in the UK. The resulting risks and uncertainty that has created mean that an elongated curve in the shape of the Nike Swoosh lasting approximately five years is likely.’
Simon Hart, International partner at RSM UK, speaking alongside Joe at the conference added: ‘We thought Brexit was complicated. These are indeed unprecedented times. The opportunities are huge, but so too are the challenges and risk. Those risks we believe are simply too severe, complex and great in number to assume a swift economic recovery.
‘We would distil those risks into four main areas of concern for businesses. The first is the environmental fallout – a risk that any progress made in our fight against global warming could stall or even reverse at a time when we cannot afford to; secondly, the abrupt adoption of technology could negatively impact areas of industry; thirdly the sizeable economic challenge that continues to evolve, and; lastly societal anxiety, a factor that was on the increase before the pandemic but that has now accelerated during lockdown isolation.'
Hart and Brusuelas joined keynote speaker Elizabeth Truss MP, Secretary of State for International Trade, and a series of heavyweight panel members including US Ambassador Robert Johnson, to present their economic and risk update during a packed schedule that focussed on Anglo-American and global business relations.
Hart added his assessment of what businesses should be thinking about to not just survive the economic and geo-political challenges ahead but to reimagine their activities and adapt over the medium to long term.
RSM was one of four headline sponsors at the event, alongside Birmingham City University, MetCloud and WM International.