Trump and Brexit threaten economic stability of G7 countries

26 May 2017

G7 GDP growth appears to have stabilised to around 1.8%, with little deviation across member countries – Big Four consultancy PwC has found. In a report highlighting a possible break from the uncertainties of the global financial crisis however, the firm also noted that productivity growth remains low, and cites key uncertainties from US protectionism and Brexit as possible causes for concern.

The global economic crisis took a toll on a variety of key economic indicators, across G7 economies, with real GDP growth at the end of 2009 falling beneath -5%. The Group of 7 have since recovered, as a new report from PwC, titled ‘Global Economy Watch: A turnaround for the G7?’, shows. The consultancy firm explores the effect of the financial crisis on resent economic indicators from developed economies – as well as current outlooks.

The G7 is a group of 7 major economies, including Canada, the United States, Japan, France, Italy, Germany and the United Kingdom. The EU is also represented in meetings, while the group was formerly known as the G8, which included Russia, until their expulsion following the military annexation of Crimea in 2014.

Recent gradual uptick in G7 economic activity

According to the latest hard-data from PwC, the G7 economies grew by 1.7% year-on-year between Q4 2015 and Q4 2016. Economic growth in advanced economies has reached a point of relative stability, with dips and peaks relatively stable and in line with the average post-crisis growth rate of 1.8% per annum.

The relative strength of GDP growth, which has returned to the levels seen pre-crisis can be attributed to a number of factors, according to the consulting firm. The G7 economies continue to find themselves in a ‘highly accommodative monetary’ moment, with interest rates still at historic lows. Governments too have begun to spend more on infrastructure projects, while demand from the E7 emerging markets, which are themselves seeing an upturn in activity, is spurring exports of high-value goods and services from the G7.

G7 post crisis productivity growth

The report notes that, while GDP growth has improved, other economic factors – particularly productivity – continue to flounder. Post crisis productivity growth rates have been lacklustre at best, and dramatic at worst, when comparing the difference between pre- and post-crisis measurements. Across the G7 productivity growth has fallen to around 0.8% between 2008-2015/6 from 2.3% between 1971-2007.

US productivity has been the most robust, falling from around 1.7% per annum for the years 1971-2007 to around 1% for the period 2008-2015/6. Canada too has performer relatively well, when comparing pre- and post-crisis levels, at around 1.4% and 0.9% respectively. The UK – which remains in the grips of an apparent productivity paradox – has seen its productivity stagnate, from a relatively height 2.5% prior to the crisis.

Various explanations are provided by the firm for the drop in productivity, including a decrease in infrastructure spending by OECD economies – which tends to affect productivity growth – by around an average of 8% annually since 2010. The decrease is in part the result of higher debt levels for national economies from, in part, supporting a financial system on the brink of collapse.

While productivity has remained relatively stagnant, the research has found that growth rates across the G7 have become considerably more aligned. The standard deviation for growth between economies has fallen sharply over the past three years to less than 0.5%, from a height of more than 2% in 2012. According to the firm, the trend may mean that growth across the G7 economies have, or are about to achieve, “escape velocity.”

Adjusted for economic cycles change in fiscal stance

Market Velocity

PwC’s analysis also points to a number of factors that suggest such escape velocity may have been realised – although key uncertainties, from Trump’s presidency to Brexit remain:

Monetary policy: Europe, in particular, has enjoyed relatively cheap money through the regional qualitative easing programme. Through the programme, the disparities in the cost of borrowing have been evened across the region, allowing businesses in Italy, among others, to access relatively cheap financing (2%).

Fiscal policy: G7 governments have begun to loosen the fiscal screws as their outlook, and budgets, improved. With a number of governments planning to invest in infrastructure upgrades (Canada, Japan, the UK and Germany).

Emerging imports: China and Brazil have seen their economies pick up steam, the former in line with increasing credit channelled via the so-called policy banks, the later through reduced turbulence. The result is general improvement to demand for imports from, among others, the G7.

Increased trade openness

The firm’s researchers also noted that, while improving productivity is one way to improve long-term GDP growth, the current extreme political situation in the US is creating key areas of uncertainty – for businesses and global leaders.

The policy initiatives put forward by Donald Trump in his shock successful Presidential campaign could, according to the firm, lead to a trade war in the most extreme case. A tit-for-tat response could, according to the Peterson Institute, lead to a decrease of around 3% in US GDP over a two-year period. For business, considerable uncertainty might unfold, creating a negative outlook for various business related activities.


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Project management industry adds £156 billion of value to UK economy

15 April 2019

Project management has grown into one of UK’s largest areas of business over the past decade, amid the increasing ‘projectification’ of work. With the gross value added to the UK economy by project management estimated to be £156 billion, this trend is likely to continue in the coming era.

Despite the huge success of project management in recent years, until now there has been relatively little data available on the size of project activity. As a result, there has been a great deal of debate on things like the number of people involved in the sector, the number of projects, and how it contributes to economic output. Due to this need for clarity, APM, the UK’s professional body for project management (the largest organisation of its kind in Europe, with 28,000 individual members) commissioned economists from PwC to shed light on the industry's economic impact.

The research concluded that the profession makes a more significant contribution to the UK economy than the financial services sector. 2.13 million full-time equivalent workers (FTEs) were employed in the UK project management sector, generating £156.5 billion of annual gross value added (GVA). In comparison, the financial services sector contributes £115 billion, and the construction industry adds £113 billion.

Gross value added to UK economy

Commenting on the discovery, Debbie Dore, Chief Executive of APM said, “Project management runs as a ‘golden thread’ through businesses, helping to develop new services, driving strategic change and sector-wide reform.”

Who is a ‘project manager’?

To reach these estimates, PwC’s researchers used detailed models to map out the value of project management activity. They ultimately defined relevant ‘projects’ as “temporary, non-routine endeavours or rolling programmes of change designed to produce a distinct product, service or end result… [with] a defined beginning and end, a specific scope, a ring-fenced budget, [and] an identified and potentially dedicated team with a project manager in charge.”

Building on this, they then went on to define what the act of project management actually is. The job consists of applying “processes, methods, knowledge, skills and experience” so that clients can meet their objectives and bring about planned outputs or outcomes. The analysts added that this includes “initiating the project, planning, executing, controlling, quality assuring and closing the work of an identified and dedicated team according to a specified budget and timeframe.”

Importantly, it should be noted that the profession is not exclusive to only roles explicitly labelled as ‘project manager’, but to any role where specialist project management skills are used. This means that across sectors these roles can have very different titles, from the self-explanatory contract managers of procurement, or the campaign managers of advertising, to the likes of festival co-ordinators in the events sector, and many more. The roles in question also span all strategic levels of the profession, from strategic to tactical and operational positions.

Gross value added of project management profession

From a sector perspective, the financial and professional services, construction and healthcare industries make up almost two-thirds of the total project management GVA. At the same time, understandably, the UK Government has a huge project portfolio, which further drives the size of the GVA the sector contributes, thanks to megaprojects like HS2 and Crossrail.

Commenting on this to the report’s authors, Oliver Dowden, Minister for Implementation remarked, “Project delivery is at the heart of all Government activity, whether it’s building roads and rail, strengthening our armed forces, modernising IT or transforming the way government provides public services to citizens. Getting these projects right is essential if we are to ensure that we build a country that works for everyone.”

Throughout 2019, 26 major government projects were delivered, representing a fifth of the overall Government Major Projects Portfolio (GMPP) of 133 projects. According to the IPA annual report 2017-18, these represented a whole life cost of £423 billion. In addition to this were a plethora of smaller scale projects, and those in early development.

Elsewhere, with the increasing digitalisation of the economy impacting entities of all shapes and sizes, IT and digital transformations tended to dominate the projects of the UK scene alongside new product development projects, with a respective 55% and 46% of organisations in the research sample having undertaken these types of project in the past year. At the same time, this varied across sectors, and unsurprisingly, in the construction and local government sectors, fixed capital projects were the main project type undertaken.


Looking to the future, 40% of business leaders expect project management will grow in the coming years due to the increased use of projects – or the ‘projectification’ of the UK. In a trend that has been witnessed elsewhere, organisations have to rapidly and continuously change in the digital age of business, driving the need for project management.

Outlook for project management services

An increased focus on value over cost – especially in the construction sector – and a forecast increase in the number of international projects are predicted to be key drivers of growth, according to the expert contributors. However, this will not happen in the absence of challenges; more than half of organisations expressed concern over the perceived impact of political uncertainty in the UK. Skills and capability shortages were also cited as a potential barrier by a third of organisations.

With regard to budgets, meanwhile, a third of those surveyed by PwC said they expect the size of project budgets will increase in the coming three years, while 40% anticipate a growth in project size. As the profession continues to mature, and as the recognition of the importance of good project management grows, it is expected that a greater proportion of project work will gain more distinct attribution to the profession itself, giving more recognition and appreciation to the role of the project manager.

Speaking on the findings of the study, Sandie Grimshaw, a Partner at PwC, concluded, “The project management profession is relatively new compared to some other professions, such as lawyers, teachers and doctors. However, as project management is a core competence vital to organisations in the UK, the profession is critical and will continue to grow in stature.”