Entering 2022, we assumed that the Covid pandemic would be the most significant economic event of the early 2020s and that we would see a bounce-back and recovery. A month before the Russian invasion of Ukraine, the business leaders assembled at Davos still rated ‘Geo-economic Confrontation’ at a distant 10th on their list of severe global risks.
Coming hard on the heels of the pandemic, the war in Ukraine and rampant inflation have intensified what was already a major shock to economies around the world. Access to markets, energy sources, supplies and labour, taken for granted for decades, have been severely disrupted. Low (if any) GDP growth, ongoing inflation, rising interest rates, shortages of materials and basic foodstuffs, and a potential wage/cost spiral look set to follow.
PARC is delighted to welcome Paul Johnson, Director of the Institute for Fiscal Studies, to present our regular “Economic Update” analysis of the coming year. Paul is widely accepted as a balanced and measured commentator on economics and public finances. He is a ‘first call’ for comment on budget day in the UK for his clear and outspoken views on the potential consequences of the proposed financial measures.
In a Times article in August, he accused both Conservative leadership candidates of policies implying that they could simultaneously cut taxes, spend more and reduce the public deficit. His response to the latest budget was equally blunt: “Today, the Chancellor announced the biggest package of tax cuts in 50 years without even a semblance of an effort to make the public finance numbers add up.”
The economic volatility of recent weeks comes against a background of geopolitical and economic headwinds that are likely to gather speed as the coming year (and indeed decade) progresses:
- The IMF has described the global economic outlook as “gloomy and more uncertain” as it once again slashed its GDP growth forecast and increased its forecast for inflation;
- The ageing of populations is starting to show up in the declining proportions of working-age people in developed economies;
- Government climate change targets begin to have an impact, as buildings, transport and industrial processes are reconfigured for Carbon Net Zero;
- Fallout from Russia’s invasion of Ukraine and rising geopolitical tensions elsewhere will continue to disrupt supply chains and create uncertainty for business activity.
Paul will help us to gain a clearer appreciation of the events of this turbulent year, bringing his unique perspective from his career as an economist, at the Treasury, the Financial Services Authority and more than a decade at the helm of the IFS.
At a time when you will be at an advanced stage of planning for 2023, Paul will give us a critical and timely perspective on how the economic environment of 2023 and beyond might develop.
Economist and Director of the Institute for Fiscal Studies
Paul Johnson is a professional economist who has been Director of the Institute for Fiscal Studies since 2011. He is a columnist for The Times, and is a regular contributor to other broadcast and print media. He is currently a member of the UK Climate Change Committee, and of the Financial Services Culture Board. He is a visiting professor in the UCL Policy Lab and at the UCL department of economics. Previous roles have included time as Chief Economist at the Department for Education and as Director of Public Spending at HM Treasury, where he also served as Deputy Head of the Government Economic Service. Paul was appointed CBE in the 2018 birthday honours.