This was one of the suggestions that behavioural economist Roger Martin-Fagg told an audience of recruitment leaders in a forecast of economic and business trends for 2024 and beyond.

“AI in all its formats is the solution” to the UK’s poor productivity levels, he said.

Speaking on Wednesday [20 March 2024] to the Elite Leaders organisation, Martin-Fagg also predicted that the Labour Party will win a majority in the next year, with a Labour/Liberal Democrat government a secondary possibility, adding, in contrast to commonly held perceptions: “I think a large Labour majority will be good for growth.”

His analysis of current economic and behavioural activity also included a warning to business that the latest generation to enter the workforce, Gen Alpha (2010-16) will pose certain challenges to businesses, especially in the ‘customer first’ arena. Representing 26% of the global population, Gen Alpha experience “seamless” integration with technology, have a ‘green’ mindset, embrace diversity but have “impaired cognitive and language skills” and “issues around social interaction, obesity and allergies”. 

“They’re good online, but not so much with face-to-face” interaction, Martin-Fagg said. “They’ve ‘got’ technology, but not much mental resilience.”

High numbers of insolvencies will occur in UK business, but this trend will result from poorly-run firms failing to increase productivity and offering less quality service, he said. Quality companies will benefit from the insolvencies by growing their market share, he added. “The good guys are pushing the numpties out, and there are a lot of them [the latter] out there.”

At the same time, a number of risks that are out of businesses’ control threaten the world and the UK’s economy, Martin-Fagg warned. He identified them as US presidential candidate Donald Trump, Russian president Vladimir Putin, China’s Xi Jinping, explosive tensions in the Middle East, extreme weather conditions, cybersecurity, populism and mass migration. 

He predicted a Trump win in the US November elections; however, he said Trump would be “foolish” to do away with measures current US president Joseph Biden has taken, which have driven strong outside investment in the US economy. Trump, Martin-Fagg said, “is such a loose cannon” that the candidate’s future actions could not be fully predicted. Immigration and cutting it significantly is one of Trump’s key themes but immigration into the US is crucial for the US productivity that is drawing such high investment. “America’s getting the money,” he pointed out.

Martin-Fagg did not entirely rule out a Biden win or the possibility that Biden would run the race and subsequently hand over the presidency to someone else, probably current vice president Kamala Harris.

Discussing the UK political situation, Martin-Fagg rejected the “mythology” that Labour governments “bust the economy… and create chaos”. He explained: “The evidence does not support that. By the way, I’m not a Labour supporter. But the truth of the matter is there is so much mythology around labour performance. I was talking to a friend who’s in commercial property, and he says, ‘Bring it [a Labour government] on. I’ve always made more money under a Labour government than under a Tory government.”

Martin-Fagg went on to say that following Labour Shadow Chancellor Rachel Reeves’ comments and Labour’s economic thinking “closely”, he believed that Labour’s recent recognition of small-and-medium businesses’ importance to the UK economy was significant as “the engine of growth in the British economy”. 

“I’ve never heard a Tory government say” that, he commented. Noting that Reeves is a trained economist, he said, “she knows the facts… They are not going to be doing major things that are going to get in the way of you aggressively expanding. They are not going to tax the hell out of you”. 

Noting the government’s existing provision for a 100% fully-expensable capital allowance for bought and leased equipment, Martin-Fagg said: “Over the next 10 years, we don’t need more equipment, we need more software, we need more AI. And if they’ve [the government] has got any sense, they will make that 100% allowance to be applicable to software.”

Martin-Fagg’s talk was delivered to a virtual audience.

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