In a tenure of economic and political turbulence departing Chief Economist, Tej Parikh, looks back on his 4 years at the IoD
When I joined the IoD in the summer of 2017, the UK had entered a somewhat perfect political storm. It was almost a decade on from the financial crisis, one year on from the EU referendum, a quarter since the triggering of Article 50, and just one month after the June 2017 general election. It was arguably the most turbulent period in UK politics in generations. Business confidence in the economy was also then near an all-time low (Figure 1).
My role initially was to advocate on policies to reshape the UK’s long-term economic agenda. Indeed, the politics of the time could be strongly linked to the frailties of the post-financial crisis economic engine, which was stuttering. Wage growth was languid and economic prospects were barely improving, particularly beyond London and the Southeast. Criticism of the role of business in society was also rising.
There was a real need to drive-up both public and private sector investment in skills, R&D, and infrastructure, to turn around the dismal performance of UK productivity after the 2008/9 recession and boost living standards across the country. The November 2017 Industrial Strategy announcement was hence a hopeful moment. But with the Government, Parliament, Civil Service, and media all absorbed by Brexit developments, and parliamentary arithmetic, the economic agenda barely moved in the following two years.
Figure 1: Directors’ confidence in the economy and own organisation (Net, %)
In Westminster much of 2018 and 2019 was spent trying to decode what each Brexit speech, meeting, resignation, and announcement meant for the UK-EU relationship. For businesses and the economy, the issues of low investment and productivity only deepened, with both corporate and policymaking activity in a holding pattern. The focus was on getting clarity for our members.
With Theresa May’s departure, and Boris Johnson’s conclusive electoral victory at the end of 2019, businesses began to feel a bit more optimistic (Figure 1). It seemed as if the clouds of parliamentary and Brexit uncertainty had lightened somewhat. The Johnson administration’s aims to ‘Get Brexit Done’ and ‘Level-Up’ the country may have only been slogans, but it was the first time in years that fixing fundamental economic weaknesses and the long-term agenda was seemingly back on the agenda. I was able to publish a key research paper on the regional growth agenda, following my work on productivity the year before.
Then of course, at the beginning of 2020, a flu-like illness emerged in China. Noting its potential to reach the UK, we conducted the very first UK business survey on COVID-19 risks, via our Policy Voice platform. It was cited in the Bank of England’s extraordinary MPC meeting in March 2020, where it announced an unprecedented level of support for markets and businesses. What followed was a return to short-term policymaking, but like nothing else before.
My role shifted to help shape the Government's pandemic support for the economy and business. On a weekly basis, there were ministerial meetings, surveys and calls with members, rallying conferences with stakeholders, and regular press releases, with new measures constantly being announced. While the support we managed to push for was unprecedented, the enormous 25% contraction in economic activity, and restrictions, were never going to stop business confidence from plunging to new depths (Figure 1).
It has since been a testing period for our members, the IoD, and policymakers. But as our battle with the pandemic has progressed, businesses are beginning to look at the bright side again as restrictions ease and Brexit uncertainty seemingly moves into the rear-view mirror. The pandemic has not only been an economic shock, it has also been a jolt to businesses and policymakers. For firms, skills, tech investment, and ESG have become key issues, while the Government has become more interested in shaping the economic agenda.
Many of the items on that agenda are similar to the economic issues I first focused on when I joined the IoD. Brexit and the pandemic have been short-term distractions, which have only reinforced the existing challenges the UK economy faces. And now finally there is a clearing to focus on the long-term. In fact, I find it apt that despite joining when our members’ confidence was then at a record low, I now leave with directors’ outlook in the economy at an all-time high (Figure 1).
From the live broadcast interviews and Westminster meetings with MPs, to the select committee appearances and speeches, throughout this extraordinary period, it has been a true honour and adventure advocating on behalf of UK business leaders in this time of intense economic and political upheaval.
Tej Parikh, IoD Chief Economist, 2017- 2021