Source for article : http :// internationalechem . com / the-ph-report /
“ BUSINESS AS USUAL ?”
OPTIONS FADE IN
POST-BREXIT WORLD
Historians will likely look back on the Brexit vote in 2016 as marking the end of an era in the global economy . Of course , there are still some who share the UK ’ s Foreign Secretary ’ s belief that it is possible “ to have one ’ s cake and eat it ”, but in general , the wider implications of the vote are already starting to filter through into politics , the economy and societal values within the UK , Europe and around the world .
By Paul Hodges & Daniël de Blocq van Scheltinga
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A key reason for this suggestion of a move into a post-Brexit world is that the vote did not take place in a vacuum . Underlying it was the transformational economic , social and political impact of demographic change as discussed here in June (‘ Ageing populations create paradigm shift for growth ’):
• Increasing life expectancy inevitably makes it difficult to maintain Baby Boomer-led levels of economic growth . The West now has an entirely new generation of people in the New Old 55 + generation , who already own most of what they need , whilst their incomes decline as they move into retirement .
• The combination with the collapse of fertility rates below replacement levels makes it impossible to maintain these growth levels , as the core Wealth Creator 25 – 54 generation has been reducing on a relative basis for 45 years .
You can contact Paul Hodges on phodges @ iec . eu . com
This month we therefore focus on the implications of this change in 4 critical areas for businesses and investors . We argue that the successful “ business as usual ” strategies of the past have reached their sell-by date . Instead , Scenario planning is essential in today ’ s VUCA world of Volatility , Uncertainty , Complexity and Ambiguity .
We look first at the global economy . We demonstrate that the American Chemical Council ’ s index of global capacity utilisation is not only very closely correlated with the IMF ’ s own data for global economic growth , but is also a far better forecasting tool . We then focus on developments in China – recently the powerhouse for growth – where three quite different Scenarios exist for the reform programme , as the Princelings and Populists battle to control the Politburo and its Standing Committee .
Next we turn to the US , where the auto industry has been a key driver for retail sales and GDP . We suggest that it now faces a typical