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International Perspectives and Connectivity will be Critical to the U.K. Recovery

by Keerat

Matt Hammond – PwC | Partner

 

Matt Hammond is PwC’s Head of International Markets for the U.K. and Senior Partner for the Midlands. Based in Birmingham he has overseen the growth of PwC’s investment in the Midlands over the last 5 years with the creation of 1,000 new roles, leading a team of 3,000 across the Midlands. He is a Deals and Restructuring Partner with 30 years’ experience in professional services. He Chairs the West Midlands Growth Company working closely with the region’s leading Universities, inward investors and local government.

We are all in the midst of the most tumultuous period of a health and economics crisis. This unprecedented pandemic of our lifetimes is seemingly defined by instantaneous scrutiny of the decisions leaders across all sectors take. Be that individual, a community nurse, or intensive care doctor, local independent traders, right through to family owned private businesses, the CEOs of our largest multinationals and world leaders. Decisions are being made at speed and scale with prevailing uncertainties that dwarf the last financial crisis.

The Global narrative has become more ambiguous. The opportunities to be addressed with great speed and purpose for leaders at all levels is to navigate their vocation, business or mission through a radical redesign of what they do and how they do it.

 

Why?

Unlike the global financial crisis, the pandemic has brought several other crises directly into the landscape of decisions which leaders must take:

  • Disparity of prosperity and opportunity including all aspects of diversity and inclusion
  • The benefits and challenges of technology advances including the uneven distribution of infrastructure and tools to capitalise on those advances
  • The challenge to trust, reliance and legitimacy of institutions including governments
  • Our environment and in particular net zero.

During the last 10 months these have each been accelerated, exacerbated and vocalised in a choreographed synchronicity that was unpredictable. Now, this gives leaders clear parameters that they cannot afford to ignore in re-purposing their business if we are to ensure a return to economic growth which is more inclusive, greener and transformative.

Global forecasts are for 4.7% growth in 2021, that fastest rate recorded in the last 20 years, but it is polarised. China has regained and returned to pre-pandemic growth of 6.5% and will overtake the US economy in GDP within 7 years at current rates, a further example of acceleration and is on target to create 11 million new jobs in its domestic economy in 2021 alone. Europe has fared better than the UK in 2020, a contraction of 7.2% in 2020 versus our 11%, and our recovery may be more sluggish in the first half of 2021 than forecasters might have hoped as we remain in lockdown through much of Quarter 1.

The timing and pace of recovery of sectors, towns and cities, countries globally will likely reveal more disparity unless there is an effective mix of international, national and local leadership on the key issues.

 

The challenges of a global restart will place a greater strain on businesses emerging from lockdown as the working capital challenges of re-growth, also requires financing on the back of almost twelve months of seriously disrupted trading for many sectors. Central banks, governments and regulators have all taken a pragmatic stance to the economic and wider support needed, they will be minded to repeat that on the recovery timelines to balance growth and debt repayment including amortisation through some inflation.

In many ways the next 5 months as we see H1 2021 through, will be vital to the shape of the recovery for the next 5 years, during which time there will also be much opportunity, for the Midlands, and the UK through international trade, if we focus on rapidly developing economies and technologies.

To address this heady mix whether in the Midlands or the Marches, Milton Keynes or Melton Mowbray, a combination of success factors will need to be delivered including:

 

1. Recreate a flourishing local economic ecosystem

Through buying local, buying to support social enterprises and recognising that the indigenous entrepreneur needs help to take their business from 15 to 50 or 500 staff and suppliers. Private businesses are the backbone of the UK, and they will need to identify investor relationships that can take their businesses to being internationally successful.

 

2. Levelling up

This political agenda is driven by what has been felt in the Midlands and the North plus our devolved economies for two decades. In addition to infrastructure investment and the localised investment needed to create a strong sense of local wellbeing we have to ensure that some of the most affected in 2021/22 are put at the forefront of skills development. And those displaced by the economic crisis supported through development of new skills which complement their experience to future proof them in their working lives.

 

3. Accelerate the recruitment and skills capacity of the workforce

As 16-24 year olds emerge from the disrupted conclusion of their education and qualifications, employers need to create and sustain skills development. At a time when it would be often easier to delay employment decisions with far reaching negative consequences, act now to create capacity for ensuring young talent is recruited into redefining the future of businesses.

 

4. Leadership

Teams and leaders have been developing to work in a more agile way than might ever have been imagined at the start of 2020. Others survived and re-configured or re-started businesses in the wake of the global financial crisis of 2008/09. The pace and scale of ‘on-the-job’ development has been incredible. Opening our eyes and minds even further to global systemic trends and markets requires genuinely diverse teams from different demographics and backgrounds. The virtual reach we have also experienced for those connecting hourly and daily on screens and tablets has to be capitalised on with genuine international reach too. Teams working virtually and (when we can) physically together drawn from diverse territories, demographics and backgrounds are imperative not optional.

 

5. Cultural purpose to organisations

We’ve listened, read, been taught much about the importance of organisation culture. Alongside those embedded behaviours, organisations will need to be broader in their purpose, not just creating a narrative about their purpose but genuinely caring for their people, their growth, their health and wellbeing. This goes much beyond the employment relationship of the past, but will define the most successful organisations and their people in the communities with which they engage.

 

6. Horizons lifted

We have witnessed the growth of agendas of localism and nationalism which are all too often seen as in conflict with globalism. Yet the supply chains that serve our daily lives from the most basic to the most complex of needs are largely international. Instead local, national and international are complementary and critical for our domestic businesses and employers to thrive. As a net exporting region, the global reach of businesses here will be critically important to the UK’s recovery.

 

7. Technology disrupts in favour of David and Goliath

Scaled investment in technology may have been seen as the preserve of the largest, well-resourced businesses but technology transformation is a complex, costly and challenging agenda for those businesses built previously on physical infrastructure and presence. Small, nimble, challengers can use technology as their only platform to market, with limited physical infrastructure and long-term commitments. The technology environment exists to create the next generation of privately owned entrepreneurial businesses.

 

8. Internationally relevant in the ‘new normal’.

The Midlands economy has become more diverse in the last two decades, we recovered more quickly than other UK regions from the global financial crisis. To repeat that feat we have to be present internationally with local expertise in medtech using 5G, a gigafactory to underpin the auto, aero and engineering supply chains as we move increasingly to BEVs, modular building, a legacy of growth in financial services, and being at the heart of the UK’s connectivity through HS2. Suppliers and customers globally are banking on it.

 

9. Business at its best

Trust in business has been at a low ebb for many years, trust in business leaders questioned with each corporate failure or transaction that is seen as having enriched a narrow group. The voice of business was seldom heard or limited in some of our most important recent debates. But the crises set out above requires businesses and business leaders to step forwards into these areas with care for the consequences of all involved and to redefine its societal role.

 

10. Optimise the interconnectedness of the global platforms

Ahead of us are major events which can be the catalyst to increasing and redefining our international profile. The Cop26 UN Climate Change Conference will be hosted in Glasgow in November 2021, we should be as vested in Scotland’s success in hosting that ‘last chance to change the climate crisis’ event as we want the rest of the UK and beyond to be invested in the success of the Commonwealth Games 2022. The opportunity for our trade and in particular our hard-hit travel and tourism sectors will be vital to realise.

There is much to be done to restore the global economy, health and wellbeing. Let’s proceed with speed.

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