Senior Bank of England economist predicts bright future for East Midlands digital sector

Michael Saunders

The Covid-19 pandemic could leave one positive legacy for the East Midlands and beyond, according to a high-ranking economist.

Michael Saunders, who is  an external member of the Bank of England’s Monetary Policy Committee, and was on a virtual tour of the region yesterday (November 24), told, said that the digital sector could be the big winner after the pandemic.

He said: “We’ve seen a real growth in digital in the last year. Many companies have taken the great leap  out of necessity. Our job now is to ensure that the digital divide doesn’t widen; there are those who don’t have the skills or don’t find themselves in the right circumstances and we must spend time ensuring they don’t get left behind.”

After  day of virtual meetings with businesses across the region, Saunders said that businesses in the East Midlands shouldn’t get too caught up in the talk of a double-dip recession.

He added: “It’s not worth getting too worried about recession at the moment. We had a big recovery in Q3 and there will be a dip in Q4 – but we’re only forecasting a contraction of around 2%.

“We know that Q1 next year will be tough and we’ll see unemployment rise significantly in the next two quarters. At the moment it’s hard to pick which sectors will emerge as winners from the downturn.”

Saunders said that a no deal Brexit is difficult for company owners to prepare for – because of the unknown. He said: “Companies have had lots of time to prepare for Brexit – but they haven’t known what to prepare for. We’re seeing that many businesses are preparing themselves to simply survive the first few weeks of Brexit, but haven’t put any long-term plans in place. Time is really short.

“Businesses will shake off the effect of Covid-19 as they’re temporary, but the long-term effects of Brexit could be more permanent.”

Saunders was UK economist at Citigroup from 1990 to 2016. From 2008 to 2016, he was also head of European economics and managed the Citigroup economics teams in Japan and Australia. He originally joined Salomon Brothers, which became part of Citi by merger, as vice president in 1990. He was promoted to director and, from 1996, managing director. He has also been an occasional expert witness on the UK economy for Parliament’s Treasury Select Committee.