The last time I pondered something like this, I was watching a TED talk on artificial intelligence, wondering where the world is taking us.
Fast forward a few months and here I am frowning at our Chancellor’s second Budget, hearing him talk of technological revolutions with robots and self-driving cars, and considering what it all means for retail.
The uncertainty is huge. With a chaotic Brexit, weakening economic growth, faltering productivity and political in-fighting, the self-proclaimed ‘fiscal’ Philip was unlikely to produce a revolutionary Budget.
Unsurprisingly, it contained only incremental changes when the country faces seemingly impossible challenges – at least for the immediate future.
Hammond’s options were further constrained by worsening growth forecasts from the Office for Budget Responsibility (OBR) which stated that the economy is now only expected to grow 1.5% this year, revised down from 2%.
Additionally, the OBR’s assessment of lower productivity growth, with output to dip to just 1.3% in 2019, means there were painful downward revisions throughout the forecast period.
“There is one certainty Hammond can bank on – consumers being the lifeblood of a ‘prosperous and inclusive economy’”
Safeguarding Britain’s finances from a possible Brexit blast was a rational strategy from a prudent man.
Given the expected fall-out from the possibility of a hard Brexit – albeit not the most likely outcome in my view – it’s difficult to argue against a prudent approach.
Nevertheless, there is one certainty Hammond can bank on – consumers being the lifeblood of a “prosperous and inclusive economy”.
Consumer spending comprises two thirds of the economy, with about one third of that generated by retail.
Shoppers form the heart of our economy, in which retail creates countless jobs, drives productivity and fosters innovation.
After all, the only way the UK will emerge from its current economic malaise is by boosting productivity.
Regrettably, fundamental reform of the archaic business rates system fell well short of what’s required for the industry.
Plans to move from Retail Price Index to Consumer Price Index (CPI) indexation two years ahead of schedule is a welcome move, but it falls short.
Retail Economics estimates that switching to the CPI will save the industry around £60m next year – meagre compared with the £7bn business rates it pays annually.
The introduction of three yearly revaluations is a positive move and it will help businesses avoid the cliff-edge situation they faced earlier this year.
However, this cancerous system continues to gnaw away at the productivity that investment in innovation, jobs and training could so vitally provide.
The announcement to increase the National Living Wage from £7.50 per hour to £7.83 per hour will add further cost pressures.
Labour costs comprise around 40% of operating costs and so that 4.4% increase will be difficult to absorb.
“I feel the Budget was born from limited manoeuvrability that only allowed incremental reforms”
Since the financial crisis, chief executives often tell me they have dedicated efforts to cutting costs.
While they are being squeezed to the limits of efficiency, passing on those costs to their valued customers will likely be the only release.
Although spending power is being eroded, the announcement that the personal tax allowance will rise from £11,500 to £11,850 next year – while the higher-rate threshold will be pushed up to £46,350 – will help ease the pressure on household finances.
Elsewhere, the freeze on fuel duty, the scrapping of stamp duty for first-time buyers up to a property value of £300,000 and the relaxing of the bureaucracy around Universal Credit will help ease the pain for some families.
I feel the Budget was born from limited manoeuvrability that only allowed incremental reforms, which were highly anticipated.
Much discussion was around technology and the exciting developments that retail will undoubtedly lead on in the future.
I strongly feel that the Government needs to adopt a bold attitude, taking a firmer grip during Brexit negotiations in order to deliver favourable trading terms for our country.
Let’s hope the UK will be in a much stronger position next year so we can deliver a bolder Budget as we head out of the EU.
Richard Lim is chief executive at Retail Economics