Unanimous. Unusual. Uncertain. Those three words sum up last month’s Bank of England Monetary Policy Committee.
Unanimous, as all MPC members voted to hold rates at 3.75%. Unusual, because it’s the first time since the pandemic that all nine members voted the same way. And the uncertain? Everyone wants time to see how the conflict in Iran and its impact on the domestic and global economy will play out.
Against that backdrop, last week’s BusinessLDN Leading London lunch with Catherine L Mann, member of the Bank of England’s Monetary Policy Committee, was a great opportunity to help fill in the blanks and get a pulse check on how things are playing out across London’s economy.
Uncertainty is the biggest issue. The clues are in the language when people start to talk about “being open for the right deal.” There’s a decrease in risk appetite. Wait and see is creeping in. And signing off contracts is taking longer.
Beyond uncertainty, in many sectors there is limited immediate-term impact. Many have fuel and energy prices hedged, for now at least. But existing pressures, around business rates and rising employment costs, mean most are already in cost control mode.
Look a few months out, however, and everyone is clear that a world of pain lies in wait if the situation persists, with the potential for supply chain costs to soar.
To end on an upbeat note, there are reasons for London to be positive. In a world of uncertainty, the capital offers highly prized stability. International visitors prioritise coming to London over other destinations, and airlines are pivoting routes accordingly. And there’s a sense that London might benefit from an increase in domestic tourism in the months ahead.
Many thanks to Catherine for joining us and sharing her insights – and to Gateley for kindly hosting.
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