Navigating a new era: Economic insights from Roger Martin-Fagg

The UK’s financial landscape is set for five ‘growth years’, an expert has predicted.

Roger Martin-Fagg told business leaders Labour’s recent budget promises to spur notable advances across the next half-decade.

The renowned behavioural economist also warned how the UK’s primary economic challenge in the coming years will not be financial resources, but effective leadership of the younger generation and an increase in productivity.

Speaking at an economic insights event hosted by NET – alongside Vistage UK, Raymond James, Monument and Cascade Cash Management – Roger provided an in-depth analysis of emerging market trends, recent economic updates and the anticipated impacts of the budget on businesses across the UK.

In light of the budget, announced by new chancellor Rachel Reeves in late October, Roger said it was the best red box unveiling he had seen in a long time.

He said: “I want you to think of your business and assume that over the last seven years, the managing director has changed five times – how would the business be doing? Badly.

“Now, assume that the senior managers were in post for an average of eight months – so not only has the chief executive changed, but the people who have got the brain to understand how the business actually works move to another business after eight months.

“Then a new senior person comes in and, of course, they’re still trying to work out what to do.

“This is ‘the UK plc’ – this is the Conservative game-playing legacy.

“This is why our infrastructure is bust, this is why planning hasn’t been changed, this is why nothing has been done.

“Rachel Reeves has promised to change it, and she is already on the way.”

Key takeaways from the recent budget include £40 billion in tax rises, an increase in the minimum wage and a surge in national insurance contributions.

Roger said: “The minimum wage is up and part of that is going to be covered by inflation – hopefully, a bigger part of it is going to be covered by productivity gains.

“It’s good for growth – yes, it’s a pain if you own a business – but if you want to get the whole system moving, you’ve got to adjust to that.”

Referring to the increase in NIS contributions, which directly affects business owners, Roger said: “If you look at Rachel Reeves’ tax measures, they are designed to increase her income to cover the increase in current spending.

“And that increase in current spending is mostly due to healthcare and pension.

“She’s only raising NIS national insurance to cover the bill of the elderly.”

He added: “The problem with Britain is in the last 14 years we haven’t taxed enough to get public services up to scratch, and yet we haven’t reduced taxes enough either.”

A central takeaway from the event was the importance of nurturing those entering the workforce – what Roger referred to as the ‘producers,’ such as Gen Z and Gen Alpha.

As the population ages, a great deal of the working population is moving toward retirement.

This demographic shift means more people are stepping out of the workforce than coming in.

Roger said: “Our labour supply is going to shrink over the next ten years – that means the taxpayer, when it comes to workers, is going to shrink.

“Once you hit 70, you’re taking more out of the public purse than you’re putting in.

“They are going to have to find ways of taxing the 70-plus – and that’s what the capital gains movement is about.”

So how can businesses combat the decline in labour supply?

Roger said: “The only way we’re going to get growth is if Gen Z and Gen Alpha increase their productivity.

“The fundamental issue for me is behavioural.

“Gen Z is 25 per cent of the global workforce, and Gen Alphas will be coming into the workforce over the next five years.

“They are wired completely differently to us, and the only way we’re going to get growth is to understand and find out which buttons to press to get the best out of them.

“If you’ve got a business and you don’t have a Gen Alpha attending your strategy session, you’re making a mistake.”

Rounding off the morning, Roger was joined by Gary Fawcett, branch principal at Newcastle-based wealth manager Raymond James, Monument, and Dr Emma Black, chief executive and co-founder of Cascade Cash Management, for a panel discussion.

Dr Black echoed the importance of understanding the workings of the younger generation, saying it isn’t all AI and being afraid to pick up the phone.

She said: “It’s not a one-size-fits-all approach.

“We’ve got an opportunity to recognise the strengths in our team; everybody wants to interact in a different way.”

When asked what key insight the panel hoped the audience would take away, Roger said: “The Government will be spending more than it is taking in tax.

“That means, if you’ve got a net increase in spending, you’ve got 70 per cent of households with higher balances than normal, there’s only going to be one result – growth.”

Gary echoed this positive outlook, acknowledging a silver lining in today’s uncertain economic climate.

He said: “I’m an internal optimist, so I genuinely think we’re in a good place in the UK and the global economy.

“Building blocks are there, interest rates are coming down and inflation is much more under control.

“Good businesses will get stronger.”

Dr Black highlighted Cascade Cash Management’s mantra of #FindYourWay.

She added: “Make sure you think about the opportunities that are there, rather than the challenges.

“Think about solutions that you can navigate, because that’s where innovation comes from.”

www.vistage.co.uk

www.cascade.co.uk

www.monument.raymondjames.uk.com