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Sean Pillot de Chenecey chats with the fascinating Gerard Lyons, leading economist and expert on the UK and global economy, international financial markets and monetary policy.

Included:

  • The effects of Covid-19 on the world economy
  • Emerging economies and how they are taking over growth in the Western World
  • The environmental challenge and Extinction Rebellion
  • Tech and its impact on the future of work
  • Political, economic and environmental challenges to supply chains
  • Fintech and how banks need to embrace it
  • Gerard’s upcoming book

Episode #111

The effects of Covid-19 on the world economy

Sean Pillot de Chenecey (00:04): Hello. This podcast is care of Speakers Associates, the global speaker bureau representing a select group of the world’s finest thinkers and thought leaders. Founded in 1999, today Speakers Associates operate out of nine offices across seven countries covering the UK, Europe, and Middle East. I’m Sean Pillot de Chenecey, author of the Post-Truth Business and Influencers and Revolutionaries. In this series, I interview a range of fascinating individuals, proudly represented by the bureau. These change agents and industry experts give an update on their specialist areas of knowledge, and also on their motivations and viewpoints regarding the future of business.

Sean Pillot de Chenecey (00:50): Today, I’m really pleased to be joined by Gerard Lyons. One of the UK’s leading economists, an expert on the UK and global economy, international financial markets and monetary policy. An excellent speaker, who’s able to convey complex economic and financial issues in simple, easy to understand ways. He’s a regular commentator on the TV radio and in the press who has testified before committees of the US Senate and Congress. And in both houses of the UK parliament. Gerard’s been described by the Times as one of the most influential analysts of the global economy. At the height of the financial crisis, he represented the financial sector on one of the major sessions at the annual meeting, the World Economic Forum in Davos, the World Debate televised live across the globe. He’s moderated conferences at Buckingham Palace, St. James’s Palace and a global forum such as the IIF. His first book, The Constellations of Economics. How will we all benefit from the new world order? Explain the outlook based on four drivers of economic trends, such as demographics in an environmental issues, hard power, soft power, and new institutions. In 2017, he co-authored Clean Brexit: How to Make a Success of Leaving the European Union. The Economist described it as one of the best books published on Brexit. So Gerard welcome.

Gerard Lyons (02:16): Hello. Good to be here.

Sean Pillot de Chenecey (02:18): Good to be here on a, has to be said rather apocalyptic day. Appropriately enough with you in the room. I have the Financial Times next to me. And I don’t no which sort of, which headline is worse than the other, all things pointing downwards.

Gerard Lyons (02:31): Yeah. Markets are having a very bad day. Well, equity markets are maybe by the time people listen to this markets, would’ve rebounded, but the nature of the beast is that there’s considerable uncertainty overhanging the world economy at the moment, largely linked to the Coronavirus. And when there’s fear and uncertainty markets can react in quite dramatic ways, as we’re now seeing.

Sean Pillot de Chenecey (02:51): And in terms of someone who appears to have seen it all been there, done that at the highest levels to cut to the chase, how, looking at the FT right next to us. How apocalyptic should we be everything from the virus through to Saudi Arabia, launching oil, price, water, punish the Russians, et cetera. How bad are things?

Gerard Lyons (03:11): Okay, well, we shouldn’t panic, but at the same time, it’s important not to be complacent. Indeed. I was on radio for today program last week and news night last week, talking about this very topic. Now we have seen shocks like this before in terms of viruses and other similar types of episodes, they tend to have a similar type of economic impact. The economic impact can often be a V shape or a U shape in the sense that the economy is hit hard for one or two quarters. Then the economy either stabilizes as in the U shape, before it rebounds or in a V-shape type of impact, it rebounds quite quickly. So we’ve seen it before in the sense there’s the downturn. It’s very difficult to quantify how long the downturn is or how deep it is. The challenge with this particular virus is because so little is really known about it.

Gerard Lyons (04:02): It adds to the near term uncertainty. Now it occurs against the backdrop where there was a lot of concern about the state of the world economy, about the limited room for policy maneuver and also against the backdrop where financial markets, particularly equity markets had already had a very good run. So all of those factors I think have left the world economy and financial markets prone to be vulnerable to this type of shock. It’s therefore important to see is sensible policy response, because whether it’s this virus or another impact, the outlook tends to depend on the interaction between economic fundamentals, policy and confidence, and referring to the FTs. You just touched on confidence at the moment is being shot to pieces in many different countries. So fundamentals, policy, and confidence. We should take it seriously. We shouldn’t be complacent, but at the same time, it’s important not to panic.

Sean Pillot de Chenecey (04:53): I think it’s interesting. You mentioned that point earlier on about, you know, fear, uncertainty and doubt that famous France Spooky arm is saying, which is has been sort of a, again, a real mainstay. I think of many people’s viewpoints for a long while.

Gerard Lyons (05:06): There has been too much pessimism in some respects about the world economy. Now, 12 years ago, 2008, we had a global financial crisis. At that moment, one could say, this is a global health crisis. The difference is then the financial sector needed to be sorted out before the world economy. Then 2008, 09 back into 2010 could rebound. At this time, it’s the health issue that needs to be addressed. But if we look back over the last 10, 12 years, despite all the uncertainty, the world economy has continued to grow. Now that I want to bombard you with too many figures, but let me just quote three figures that I think are interesting. 32, 62, 87 size of the world economy and trillions of dollars. The world economy was $32 trillion at the beginning of this century, the year 2000, it was $62 trillion the day the financial crisis broke back in 2008.

Gerard Lyons (05:57): And at the end of last year, despite everything, the world economy was $87 trillion in size. So it has continued to growth. The challenge particularly where we are sitting in the west is that more and more the growth has been seen across the emerging economies, particularly China. Indeed. The fact that China has been hit by this crisis makes it particularly relevant in terms of the immediate outlook for the world economy. But what we’ve really seen is that Western economies have continued to suffer in the aftermath of the global financial crisis, but in the west, America has outperformed the rest of the west. But the other big change is that while the west has been impacted by the aftermath of the global financial crisis, emerging economies led by China, but not just China have accounted for more and more of global growth. And the further ahead one projects, I think the dynamic part of the world economy will be stretching from India in the west to America in the east.

Gerard Lyons (06:53): It’s the Indo Pacific. It’s the subcontinent as it used to be called India, Pakistan, those very populous parts of the world, indeed one in 12 people in the world is an Indian under 27. That’s a pretty,

Sean Pillot de Chenecey (07:04): Wow, impressive. Yeah.

Gerard Lyons (07:06): Then one stretches going sort of, Eastwoods to Northeast Asia, Southeast Asia, Asian, China of course, taken on board Japan as well. And then into the States, the challenge here in Western Europe is how Western Europe repositions itself in this changing and growing globe economy. So near term, the aftermath and the impact of the virus is very important, but there are lots of longer term deep rooted, structural features and challenges and indeed opportunities we need to focus on.

Sean Pillot de Chenecey (07:37): I thought it, the shape of the downturn or the rebound, I think is a fascinating thing. The famous Martin, so Martin Sorrows, bath shaped recovery was always, and which way rounds the bath is it these people used to talk.

Gerard Lyons (07:50): Yeah. Corrugated iron recovery. So I’ve heard refer to as well.

Sean Pillot de Chenecey (07:55): Fantastic. Yeah. Yeah.

Gerard Lyons (07:56): Bob was on, but yes, it’s important to have a visual image indeed. When one speaks about the economy, it’s important to know the detail, but to be able to explain it in easy to understand ways to whoever you’re talking to.

Sean Pillot de Chenecey (08:09): I was about to say precisely that because, from the point of view of the audiences you speak to and I’m sure, obviously there’s a real variety of them. Naturally, some will be highly steeped in economic understanding and others, quite frankly, won’t be. And so I know in your details, the ability to actually translate the highly complex in everyday terms is a enviable skill.

Gerard Lyons (08:33): Yeah. Well, you need to have a narrative, basically a storyline to bring it together and if it’s possible to do so then use it. In terms of say the virus at the moment, one things I was saying on the radio last week when I was asked about policy, I was saying, well, policy needs to be very targeted. It needs to be timely and it needs to be very transparent. And so similarly one can use such similar types of analogies or abbreviations or whatever you want to call them to describe things.

Sean Pillot de Chenecey (09:00): And by the way, just in terms of to jump outta this for a second, go back in terms of narratives. So go then your personal narrative.

Gerard Lyons (09:08): Okay.

Sean Pillot de Chenecey (09:08): Where did this all get going for you?

Gerard Lyons (09:11): Oh, okay. Very good. Actually. I’m from London originally. So Irish immigrant parents, spent six years at university, PhD on Tesla efficiency of financial futures markets that tends to end conversations very quickly when you say that. But basically I went into the city or came into the city, October 85. So I spent 29 years in senior positions with large international banks, Chase, Chief UK Economist, Swiss Bank sat as research overseas for Dai-Ichi Kangyo Bank, were then the biggest bank in Japan and then with Standard Chartered. And then I went to work with Boris Johnson for three years when he was mayor of London in his second term, it was supposed to be a non-political role. I was there for about 10 minutes and realized that no one else viewed it as non political.

Gerard Lyons (09:52): And then that was very good. It be, I played it very straight. You need to look at economic and financial issues with a straight bath take out the politics if you can. And since 2016 I’ve been doing the portfolio approach, a net wealth is a challenger wealth manager, Simon. I’m a shareholder there as well as the strategist at the cutting edge of FinTech. I’m on the board of Bank of China here in the UK. And then I’m on the few advisory boards, The Grantham Institutes on Climate Change and the Environment at the London School of Economics and Imperial Colleges, the leading cutting edge one might call it think tank, but it’s a university Institute looking at the environment. So I’ve been at the forefront of talking about those issues. And also I’m on the advisory board of Warwick Business School. So I’ve managed to keep a portfolio approach.

Gerard Lyons (10:39): But the key thing about this is to have a network. So you are tied into different people, different groups, different issues, but the underlying issue is to understand and know what’s happening to the world economy. It’s very much about putting wherever you sit or stand in that changing global context. And the world economy is very interesting at the moment, not just in terms of some countries we’ve talked about, but some of the underlying themes, demographics we’ve touched on in terms of India’s population, the environment naturally is a big issue and I think will continue to be. So especially this year with the COP taking place in Glasgow in the UK. So there are some underlying themes, but despite all the pessimism I’m quite optimistic about the world, it can be. And the longer term outlook, the way I would describe it is perspiration and inspiration.

Gerard Lyons (11:24): Perspiration reflects the demographics. And there are challenges with that in terms of how we basically address older populations, but there are big opportunities. At the moment, I think it’s one in 14 people in the world is over 65. Not that that’s particularly old anymore, and that’s due to go to one in six, in 25 years time. So some populations are very old, but at the same time, we have some very young populations across Africa, continent I visited a lot with Standard Chartered and as well as India, and as I’ve mentioned earlier, but the inspiration is also particularly important. That’s the technology, the fourth industrial revolution, artificial intelligence, and people tend to be very fearful when there’s dramatic change. But one of the biggest messages really is for businesses and indeed for us anyway, as people is to embrace change, people need to understand the context in which that change is taking place. And then that tends to make people in my view, less fearful and allow businesses to plan for the opportunities as well as maybe the near term disruption that comes from the combination of perspiration and inspiration.

Sean Pillot de Chenecey (12:34): And can I ask on that, one of the points you mentioned there specifically around things like COP26 and the environment, I mean, one of the, you know, the most high profile issues certainly of last year was the explosion in awareness or, and visibility of the Extinction Rebellion.

Gerard Lyons (12:55): Yes.

Sean Pillot de Chenecey (12:55): Movement. Now, the very interesting to have this sort of conversation with someone like yourself who, the person’s treat my views being sort of, you know, an incredibly senior economist, what an earth would he have, you know, on a stereotypical way to link into an understanding people like Extinction Rebellion. I think it’s really interesting to sort to talk someone like you about it from the point of view, someone who of evidently really, really gets us to put it mildly. So

Gerard Lyons (13:19): It’s interesting to see. Yeah, it’s interesting to see, see how things change. I remember the Rio Conference back in 1992. Indeed. Then there was a 14 or 15 year old young girl. If I remember who’s took the, took that conference by storm. And it shows that we have been here before. What’s more interesting and exciting about this particular time is that it’s taken more resonance with people and therefore it’s more center stage. Now, if one talks about Extinction Rebellion, I think the narrative that is there is important. This is a big issue. But the approach people take to address that narrative is also vitally important. I don’t agree with the, basically the means, shall we say, but it’s important that this messaging is sent to stage. Now, one of the things I was writing at the end of last year is that one should not view it as a contest between the environment versus the economy.

Gerard Lyons (14:17): It’s not a case that we can address the green agenda and have to sacrifice economic growth far from it, whether you are left wing or right wing. One of the most important issues in economics and in business is incentives and you’re incentivized in different ways. People might immediately think it’s an incentive from tax policy, from regulation, but more often than not, the incentive comes from what consumers want. If consumers want to buy something that’s more environmentally friendly or to do things that are more environmentally friendly, then businesses tend to respond. And what I think we’re seeing is the sea change, but it’s important. This is reinforced by the policy environment. Here in the UK we are aiming to achieve net zero by 2050. Now some as we saw in the recent UK election, we’d like that to be sooner, that’s an admirable aim, but 2050 itself is quite a sort of tough ask.

Gerard Lyons (15:15): But I think it highlights the fact that when you start to address this issue, sometimes it can take a long time to be realistic about putting things into place. But I think we should be ambitious and indeed excited that if we aim for net zero by 2050, then the UK can lead the way and probably will actually achieve it before 2050 to be frank when we start to focus on this, in terms of addressing the environment or agenda, while at the same time, allowing the economy to grow, you’d need to have jobs. You need to have people in work and at the same time you can and I think we will address the environmental challenge ahead.

Sean Pillot de Chenecey (15:52): Okay. What about the first point you made there? In the list of issues, that are really fascinating at the moment and that was FinTech. And so certainly I think that issue of, in various parts of the world, those drivers of very, very young populations, potentially very, very tech forward, dissatisfied with on a, should we say on a high street banking level what’s been offered to them, et cetera. In terms of the, I mean, obviously you’re looking at a very stratified level, many ways, but what are the really dynamic things in the world of FinTech and financial innovation that are interesting you at the moment?

Gerard Lyons (16:28): Well, if I take net wealth where I’m involved the, what got me into pushing net wealth was the fact that this whole area of personal finance in the UK is so opaque. So opaque because it allows the incumbents to charge people, you and I, and others, an extremely high amount of money to provide a service that could be provided far more cheaply. What technology does is allow newcomers to break through and challenge the incumbents and openness and transparency is often foremost there when people can actually see things when they’re not hidden behind high fees or buried into nitty gritty detailed, do you read the terms and conditions and tick, et cetera? It’s like when you work, some of those programs on TV puts you off doing anything almost page 600.

Sean Pillot de Chenecey (17:21): Yeah.

Gerard Lyons (17:22): But, the technology actually allows you to provide a service. That’s available to more people, very accessible and with fees being very open and usually far lower, but it’s not just in this area. There’s lots of other areas. For instance, the great challenge in finance is the big embanked. I spoke to the Commonwealth Finance Ministers Conference about gosh, 12, 13, 14 years ago on this, I did a lot of work about, bringing financial and banking services to the great embanked. And the challenge with that was often the cost and the risk involved. What technology can allow you to do is to provide services far cheaper, far more transparency, and therefore remove the risks involved and allow incumbents if they wanted to, but more likely allow newcomers to start to bring financial services to greater sway for people. The incumbents basically always want to put up rules and regulations to stop new entrants coming in.

Gerard Lyons (18:21): So technology is quite exciting, but it’s an indication of artificial intelligence and the broader technological change. We’ve had four industrial revolutions. Some would say we might have only had three, but people call the next one, the fourth or fifth industrial revolution, depending on which way you look at the past. But the thing about previous industrial revolutions is that there is a substitution effect. As new technology gets rid of some of the old labor intensive technologies and people lose their jobs, but then two things happen. One, the whole new series of jobs are created because things that you never even thought could happen, start to happen like 40 years ago, no one talked about mobile phones. That’s a vibrant dynamic industry and employing lots of people. So you have a creation of a lot of new jobs, but also at the same time, new technology allows the cost of existing products to then fall, which means that people have better spending power.

Gerard Lyons (19:16): Their wages might not rise too much, but they can afford to buy more things. And that, that allows more jobs to be created than those sectors. So what we’ve seen in the past is that artificial intelligence stroke, new technology stroke, fourth industrial revolution stroke. What if you want to call it. In the past, we’ve seen some jobs being lost, lots of new jobs doing created. People also becoming wealthier in terms of what they can spend their money on creating new jobs. So there tends to be a net addition of jobs. And in the past, those industrial revolutions have been not only beneficial for the economy, but also very beneficial for job creation as well. And this is one of the interesting aspects at the moment. One of the big debates is future of work. Will there be jobs available for everyone? And the likelihood is based on the past. Yes. But also the nature of work will change people being more flexible in terms of how they use technology. But of course we need to ensure that we don’t have a situation of race to the bottom workers’ rights need to be enshrined. And that’s where the electric comes in. It needs to sort of keep the pressure on the politicians.

Sean Pillot de Chenecey (20:23): Okay. Yeah. Yep. What about just going back for a second, when you looking at your, and again, I mean, CV just goes on and on. It’s quite phenomenal

Gerard Lyons (20:33): In a good way.

Sean Pillot de Chenecey (20:34): In a good way. Of course, exactly in a dynamic way.

Gerard Lyons (20:36): Okay.

Sean Pillot de Chenecey (20:36): And if one was to sort of take a highlighter and put a, you know, a mark through one particular thing that you think bang, that is what I’m, you know, really seriously personally proud of. Which bit would that be?

Gerard Lyons (20:49): Well, I’ve made some good calls against the consensus, so the foresight has been good. The important thing is to actually call it as it is, and if you’re part of the consensus. So be it. If you have a view that’s different to the consensus that can sometimes be more exciting, more interesting, but early on in my career, the Lawson Boom was taking place in the UK. And I took a view that this boom was likely to end in the bust, even though the government was running the budget surplus, the UK economy was running a big trade deficit and the private sector naming the individuals were incurring higher and higher levels of debt. So I said the boom would become a bust. It was a very non-consensus issue in the city. It proved right that as I was arguing the case, the times each week would have a, what was called a guilt age column, the top eight economists in the city who were all esteemed much older people used to write it in terms.

Gerard Lyons (21:39): And I was added to that list as sort of the ninth economists. So I was 25 at the time. So that was, that gave me great exposure. But that was a good time. Also, UK leaving the ERM, the economic consensus was that leaving would lead to higher rates and the recession, I said, no, if we leave the pound would fall, interest rates would fall and the economy would bounce back and boom, which it did do. I got the Asian currency crisis, right. And also a month before the global financial crisis, I was one of the two UK economists predicting a deep imminent recession. So an answer to your question. What’s been nice maybe is having the foresight or the confidence to stick with views that had not been consensus. And they’ve been proved correct. And look at the end of the day, you’re not always going to get it right. But I think it’s important to be able to put things together from a top down on the bottom up perspective and try and see where the reality takes us.

Sean Pillot de Chenecey (22:36): Wow. How superb. Can I, by the way, just in terms of real specific point was in terms of calling it right on the last one in terms of the downturn, was the other person, was that Gillian Tett of the FT?

Gerard Lyons (22:45): No, actually there was another, there was another person, but Gillian was writing some good stuff in the Financial Times, but I don’t know if she was predicting

Sean Pillot de Chenecey (22:52): All right. Okay.

Gerard Lyons (22:54): the figures. But in fact, it is an interesting situation that back then there were a number of good people who were outlining specific issues that needed to be addressed. Timing is always the challenge actually. You cannot always get the turning point exactly right. But you need to, if you can, to highlight the issues and outline where the potential problems may arise.

Sean Pillot de Chenecey (23:20): Okay, fantastic. What about, okay, so this is, I mean, obviously goes out saying it’s incredibly inspiring, but what about you then? So where do you get your information from common? Where does the Oracle look? So, are you a great reader or what, so what’s a secret?

Gerard Lyons (23:34): I’m a people’s person. So yeah, I read, I, listen, I absorb as much information as possible. And also I talk to my children, I’ve got three children, their twenties. Eldest is a standup comedian, she’s very good. And other’s a medical student, the other’s start to work. So he’s finally off the payroll. So, but it’s important to yeah. Read, listen and travel. Although people might not be doing that too much with the Coronavirus in the near term, but it’s important to actually pick up different information sets, whether it’s reading economic or other stuff, or basically watching TV or speaking to people. But often, it’s a case of making sure you join the dot and pull the different pieces of information together.

Sean Pillot de Chenecey (24:14): Can I ask you, is there, when you sort of, when you look at the things on a sort of global basis, is there, I know you mentioned sort regions that that really interest you, is there a particular country that you look at and think, wow, you know, that is really taking off and it’s, it may be the sort of place that quite frankly, 10 years ago, no one would’ve associated with an economy really booming.

Gerard Lyons (24:36): Well, yes. In fact, the, you can see that in the UK, sometimes the UK is a UK is a very, UK is a very imbalanced economy. It’s not just London versus the rest. It’s urban, rural, coastal, inland, skilled, unskilled, old, young. But sometimes you can be surprised going across the UK and you see different parts of the country, urban centers usually doing very well. But in terms of your question specifically, it is a case of sort of going round and sudden times you see cities as much as countries suddenly becoming dynamic. Well, take London. London is a global city, but top 600 cities in the globe. At the moment account for half a global growth in 25 years time, the top 600 cities are expected to account for over two thirds of global growth. So more growth coming from cities, but what’s fascinating is those top cities are changing at the moment of the top 600 cities, roughly 140 about are in the west, 137, I think to be precise in 20 years, time, only 20 of them are expected to be in the west.

Sean Pillot de Chenecey (25:41): Wow.

Gerard Lyons (25:41): So when you go to emerging economies, the dynamism of India is very apparent when you go to Mumbai or wherever else. In China, you can tend to see things happening in a very different way. But when you go to Singapore, it’s a sort of dynamic diversified economy. When one goes to the Middle East, what’s interesting is how Dubai set the trend. What have you think about the country or it’s diversified? One is now seen other countries in the region diversify, but in answer to your question, it’s usually Africa, that’s the place where you go to and you suddenly see things really starting to change. And similarly in Latin America as well, but usually as a visitor, you tend to notice the urban centers. You don’t always get a chance to go out across the country and the regions.

Gerard Lyons (26:33): And that’s often when you get other sort of aspects taking place, you can see the domestic challenges, but cities are really becoming smarter, more dynamic. And you’re starting to see younger populations migrate more to whichever city it may be. And you start to see economies really perform. The 7% club used to be the club to try and pick because economies that grow by 7% per year and do that for a decade, double in size, in real term, within the decade.

Sean Pillot de Chenecey (27:02): Wow. Okay.

Gerard Lyons (27:03): In a low growth, low inflation environment, growing by one or 2% for most Western economies is a good thing. So those rapid rates of growth are seen across the emerging world. And maybe of all the trends coming back to your question, finally, that’s most interesting is to see the belt and road initiative from China. So if you go to the central Asian economies, these cities have suddenly sprung up almost out of the desert it seems out of nothing. And you can see how technology, innovation, infrastructure spending has really taken hold. Of course, from coming back to the environmental issue, the most important thing is those countries on the belt and road need to make sure they’re environmentally friendly. And that’s often the biggest challenge to the environment at the moment that people don’t really focus on the need to avoid coalfire energy along that road, it’s more than the road. It’s a whole sort of.

Sean Pillot de Chenecey (28:00): Yeah, yeah, sure.

Gerard Lyons (28:00): Dramatic change.

Sean Pillot de Chenecey (28:02): Yeah. Yeah. Okay. Is it, am I right in saying, is it Greece? That’s the European country where the belt and road has really linked into as its first sort of, you know, European, sort of staging post?

Gerard Lyons (28:13): Well, it’s interesting you mentioned that. Well, yeah, the, well, there are many countries, but Greece is a good one. The Greek Port of Piraeus, which is the Port in Athens. Let’s put it this way, in Greece’s second bailed out when the European union was supposedly bailing Greece out. Well, it basically gave them the money so they could give back 95% of it to French and German banks in sync.

Sean Pillot de Chenecey (28:36): How generous.

Gerard Lyons (28:37): Yeah. So while that was happening, the Chinese and we seem to mentioned China was lot in this talk. Basically took a long term lease of the Port of Piraeus to fund the second stage and to agree a third stage development. So they started to put real money into Piraeus and that became one of their ports on the Mediterranean. That was part of their belt and road.

Gerard Lyons (29:03): But, while Greece might be at the forefront of that, you’ve seen other developments more in terms of Eastern Europe and sort of the stands as well with management. But also at the same time, you mentioned Greece, it’s, the big challenge in Western Europe is how Northern Europe and Southern Europe sort of merge together because Greece is not a German. And within the Europe area, they don’t have the flexibility to pursue different policies. Here in the UK, obviously we’re in a very different dynamic and London is a sort of good example of that. We’re a very open country, a very open city. So we’ve seen lots of, people from Western Europe come to the UK to seek employment. But it’s all part of globalization. And maybe one of the big debates at the moment is whether we will start to see deglobalization. As a result of some of the political issues that come to the forum recent years, and now with the virus, some of the other focus of attention on our greater dependency in the recent past, on other countries, across the world, while that’s a good thing, cuz it allows things to be done very efficiently. It produces cost effective products. It allows inflation to be low, but that’s now coming with a cost because if there’s a problem somewhere over here, it suddenly impacts us very quickly on the other side of the globe.

Sean Pillot de Chenecey (30:26): It’s fascinating. I mean, my sort of a, with my basic knowledge of economics compared to your vast one, I mean, certainly that is your, you know, supply chain dynamics appear to have suddenly become center stage issues, which everyone is trying to get their heads around for that precise reason.

Gerard Lyons (30:43): Yeah. We used to have what was, well, we have had just in time technology and just in time supply chains, it was very much on the back of how efficient the Japanese were in the seventies and in the eighties. Toyota was the classic example, but then it was followed not just across Japan, but by other countries. Now we have had some supply shocks before and when we’ve had the supply shocks before, it’s suggested that big firms need to have, what’s called more redundancy in their supply chain. So they need to have more warehouses, more flexibility. But it’s very easy to say that, but difficult to do because the challenge is to keep your costs down. Now, what we’re seeing is because of this crisis, the fact that supply chains are so interlinked, they’re so vulnerable to any potential shock. This is obviously a very big shock.

Gerard Lyons (31:29): Now the question therefore is whether we will start to see change in the future. Now politically with President Trump in the States and maybe politically, because of change here in Western Europe, there’s already been a greater focus on the issue about bringing more production back home, is it cost effective to do so, to try and do more things at home? Obviously you add in the environmental agenda and it makes sense to try and do things closer to home. In terms of agriculture, for instance, it’s a natural win to have more things produced on your own doorstep. So I think there’s a political, economic and environmental challenge. And there’s also political issue here that addresses this globalization versus de-globalization. In my view that while the politics and economics are maybe putting in different directions, we’ll probably see things settling down in the middle. There will still be globalization. You and I will still naturally want to be able to travel. You and I will naturally still be able to want to open apps from other parts of the world, but I think there will be a better balance in terms of how it works out in the future.

Sean Pillot de Chenecey (32:34): Okay. Okay. Just the last couple of questions, cuz time is against us. It’s been absolutely fascinating. Just in terms of, you know, we talked about, you know, sort of, issues regards to globalization, the economy, we looked at sort different regions, different countries, different ways of doing business. Are there any specific financial institutions, financial brands and organizations that you would point to and go, now there’s an example that is really, really great. So from the car side talking, so there’s the Toyota version, how they did what they did is absolutely amazing on the banking side. Is there anyone you’d point to and go now there’s an organization that are really looking to the future?

Gerard Lyons (33:12): Okay. Well, given on the board of Bank of China in the UK, I think it’d be unfair to pick out different, oh sorry, a particular institution. But I think it comes back to your earlier question about FinTech as well, how this whole industry needs to change and therefore the incumbents need to adjust. Otherwise they will be in trouble. And at the same time, new entrants need to be able to make their way into the sort of the financial system in order to be able to provide better services to customers. So I think this links into not answering your question directly, but the regulator environment is important. It’s the way I would say the regulatory pendulum was at one extreme before the global financial crisis. It was at an extreme where it was self-regulation, which clearly didn’t work. We’ve now had that pendulum move to the other extreme, which is very intrusive and that makes it more difficult for new entrants to come into the market.

Gerard Lyons (34:13): So we need to see that regulatory pendulum, like any pendulum settle in the middle to get the balance right, to protect the system, to protect clients’ individuals, but also at the same time to make sure it doesn’t just protect incumbents by putting up firewalls or different barriers to new entrants to come in. And then in answer to your question, therefore, if one looks at the FTSE, the top hundred companies in the UK, or indeed that any of the big indices in the States. What’s remarkable over time is how many firms in that top hundred or whichever leading group you take change. And I think that is likely to be the case in the financial industry as well. How we will see big players have to evolve, adapt, and change. And then we’ll see new entrants who play to their strengths. So I think the financial sector is being very well protected. You could argue in the past. But nowadays we need to see it providing services that are more efficient, cheaper, easier, and value for money and the great embanked, those large number of people who don’t have access to financial services need to be served better. And that will happen, I think, across Africa, across India, et cetera. And it shouldn’t just be global players. I think there needs to be players coming to the fore who residents in those particular countries.

Sean Pillot de Chenecey (35:40): Okay. So then literally last couple of things. So next big things coming up for yourself. What’s on the horizon for Mr. Lyons?

Gerard Lyons (35:49): Well, actually I’ve you mentioned at the very beginning, a couple of books, I have written, The Consolations of the Economics, which is about how the global economy was changing and Clean Brexit about how the UK needs to make a success to leave the EU. I’m currently working on the book with my eldest daughter. Who’s a comedian. And it’s about talking about the big economic issues and making them accessible to all. She writes incredibly well. Well, I would say I write well, but she writes in the very funny style. So we’re working on the book at the moment. So questions such as why I won’t say exactly the questions, but why are the trains so bad? What is monetary policy? Things like that. So bringing economics to every lay use.

Sean Pillot de Chenecey (36:34): Fantastic. And when’s that likely to be out? Do you know?

Gerard Lyons (36:37): Well, it will be finished by this autumn when it comes out, then depends. Hopefully by the spring of next year. We’ll see about of course, over and above that is keeping the breast of all the changing dynamic situations because, we’ve got lot, I’ve used the word challenge, but there’s always opportunities there as well. And after the Coronavirus, obviously it’s a very worrying situation, sort of, I’ve got a mother who’s 93 and a mother-in-law who’s 90, so older people and more vulnerable. So you can’t take this, in a complacent way, in any say shape or form. But often when we have a big shock like this, there are lessons to be learnt. And I think it’s important from an economic perspective that we start to realize that issues such as health need to be basically funded far more effectively. So one of the things I try and do is keep abreast of these developments and I’m often asked to commentate on them and talk out what needs to be done. So, basically find out what’s happening to the world economy and hopefully trying to get it correct when it does unfold.

Sean Pillot de Chenecey (37:42): Okay. And I guess last question it’s been absolutely fascinating general. Thank you so much. Okay. So let’s just look at the issue of the perfect speaking engagement for you. Okay. So no matter where the listeners are for this podcast, be they’re in major of Europe or the US or whatever Middle East. If someone is looking to book you to speak to their delegates, then what what’s gonna be in here, the perfect environment for you and on precisely, what is you, would you like to be giving a talk to that ideal audience?

Gerard Lyons (38:17): I’m very flexible. I tend to not only adapt and change him, but also play to my strength. So my ability is to look at global regional national issues also at the longer term and short term drivers, and basically put the context around what’s happening and explain that to the audience. So what’s happening now? What’s about to happen? And what does it mean for you sitting in the audience? I’ve spoken to groups across the globe, small size, the big size, as you mentioned at the very beginning, the big Davos global debate. But I’ve spoken to audiences in all shapes and sizes and I always get good feedback so long that may that continue.

Sean Pillot de Chenecey (38:57): Exactly. So Gerard Lyons, leading economist, an expert on the UK global economy, international financial markets and monetary policy and an excellent and renowned public speaker. Thank you.

Gerard Lyons (39:09): Thank you.

Sean Pillot de Chenecey (39:15): Thank you for listening to The Speakers Show Podcast. Please leave a rating on iTunes. We’d really appreciate it. And also it’d be great if you could subscribe to the podcast itself. You’ll find it also on Google podcasts, SoundCloud, or your favorite podcast app. Thank you.

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Sean Pillot de Chenecey speaker

Sean Pillot de Chenecey

Foresight strategist, author and podcast host Sean Pillot de Chenecey is an inspirational speaker, who’s also consulted for some of the world’s biggest brands.

Sean has a very deep level of knowledge regarding the genuine issues impacting brands from a cultural, social and business perspective.

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