Client Update - 6th January 2023

I am delighted to take my first opportunity to wish you a Happy New Year, I do hope you had an enjoyable Christmas break. For those of you who have made resolutions I have good news – if you haven’t already given up on them, 80 per cent of you are likely to have abandoned any resolutions you might have made by the second week of February!

I have been reading about some interesting resolutions made by executives at the start of the year. My focus was particularly caught by Shopify, the Canadian ecommerce platform, where its Chief Operating Officer tweeted a new rule. “Meetings are a bug. Today, we shipped a fix to this bug at @Shopify. To start 2023, we’re cancelling all Shopify meetings with more than two people. Let’s give people back their maker time. Companies are for builders. Not managers.” He also banned meetings on Wednesdays and ruled that those for 50 or more people could only be held between 11 and 5 on Thursdays. In a memo to staff, it was explained: “Shopify is planning to delete nearly 10,000 events which equates to approximately 76,500+ hours of meetings.” This seems to be a growing phenomenon. A few years ago, Jeff Bezos made waves with his two-pizza rule, which meant that meetings should only be attended by the number of people who could eat two pizzas. The Amazon founder also banned PowerPoint and insisted on starting all meetings in silence so attendees could read a preparatory memo providing the agenda because he was tired of ill-prepared executives bluffing their way through meetings.

Back to the news and it already feels like we have not been away at all. Train strikes are once again gaining momentum, jobs are being cut as profits come under pressure – with Amazon being the latest to announce cuts of up to 18,000 jobs. In addition, minutes released yesterday from the US Federal Reserve’s December meeting underlined their determination to defeat inflation. Minutes from the Federal Open Market Committee’s meeting showed “no participants anticipated that it would be appropriate to begin to reduce the federal funds rate target in 2023”. Translated – it simply means no rate cuts are planned this year. Officials observed that “a restrictive policy stance” will need to be maintained until economic data “provided confidence that inflation was on a sustained downward path to 2%, which was likely to take some time”. No change here, however I imagine they will be forced to reconsider this at some point but for now we are not surprised that they have continued to be so forceful in their language.

China is steadily reopening, only to be met by requirements from Europe for Covid tests for anyone returning from the country. China seems to have been met with criticism for shutting down its borders in 2022 and now criticism for reopening them.

I am afraid that inflation and central banks responses to get it under control will continue to dominate the news in the coming months. Inflation could turn out to be more entrenched than expected. Wage growth inflation in particular seems sticky due to a shortage of skilled workers. The new multipolar world order will enforce structural changes to the economy, such as the need to rebuild reliable supply chains closer to home, which often comes at higher prices. Similarly, the urgent need to decarbonise could exacerbate “greenflation”, that is, rising prices for eco-friendly goods and services.

We have another busy year in front of us and we are very much looking forward to seeing you all throughout the course of it. If you have any queries, at any time, please do get in touch with us. For now, have a good weekend and let’s hope 2023 is kinder than the year we have left behind.