The Governor of the Bank of England Andrew Bailey, fourth from left, with York business leaders including Andrew (third from left). Photograph: Gareth Buddo
It is not every day the Governor of the Bank of England comes to York for lunch! Andrew Lowson explains why he visited and what he discussed with local business leaders
We often say that York needs to showcase itself better to key public figures; not just its current offer, but pipeline projects such as York Central. I think it is safe to say York did that as Andrew Bailey, the current Governor of the Bank of England, commented on the fantastic surroundings of the Grays Court Hotel.
Thanks go to Bank of England agent Alex Golledge and Make it York for arranging. It was good to hear that whilst the Governor has access to comprehensive financial and economic data, he feels it important to hear from business people ‘on the ground’.
Consumer confidence remains – for the time being
We are all aware of the sharp rises in the cost of living. Yet looking at other headlines, you could be forgiven for thinking cost pressures are being exaggerated because consumers appear to be spending as normal.
During York St John University’s recent ‘Top 100 Businesses’ event, LNER told the audience their leisure bookings are back to pre-Covid levels. Easter ‘travel chaos’ at airports, ferry ports and motorways seem to back this up and York itself is bustling.
When this picture was presented to the Governor, he highlighted two things. Firstly, that we must not forget that cost of living increases always hit the poor first. This may not be immediately apparent, as this vulnerable section of society do not have the luxury of eating out or shopping even at the best of times.
Secondly, the Governor highlighted that we may be seeing a delayed spending squeeze due to billions of pounds of consumer savings racked up during Covid. York will no doubt benefit again from staycations and hopefully some international visits – however businesses should remain mindful that consumer reserves will not last forever.
One surprise anecdote from the Governor was that business debt in the UK today is not that much greater than it was pre-Covid! He qualified the UK situation by highlighting that debt among small business was proportionally higher. This rings true with conversations I had during the pandemic, with many independents taking on debt to look after staff and keep family businesses going.
The other key conversation here was on the supply chain – with all business leaders in the room providing examples of rising costs. I used the example of a local deli who, while I bought a salad, told me some of their cheese prices were rising by 60%! ‘What will my salad cost next week?’ I joked nervously. The joke was not well received – these rising costs will leave business owners with tough choices.
Brexit, Covid and Ukraine
The seismic recent events of Brexit, Covid and Ukraine brought a more open discussion during the lunch as opposed to a clear steer from Andrew Bailey – he admitted that even for the Bank of England, understanding which economic trend can be attributed to which event is multifaceted.
All local business leaders concurred in almost humorous agreement that business planning in the current climate is nigh on impossible. A skills shortage seems to be a consistent theme across sectors, whether you are trying to find a tennis coach to work weekend shifts, or recruiting a data programmer.
There was consensus that the impacts of home working are really beginning to show. The Governor said that every business community he speaks to uses the examples of top talent in the law profession being courted by London companies. York solicitors have told me this themselves, with London practices offering home working and 30% salary hikes!
Of the three events, you could see Ukraine was primarily on the Governor’s mind. He highlighted the volatility in the energy sector as something the world has never seen and an issue that will remain as countries search for answers on alternative energy supplies.
However, as the Governor elaborated on this subject, you could tell it was not just the economic / monetary costs that weighed heavily. The human cost is something that is becoming increasingly apparent to all of us.
So as both businesses and consumers in York inevitably tighten belts in the coming months, let’s not forget we are extremely lucky that we can trade at all. Many have had this basic right taken away from them; for some permanently.