Lorna Tilbian Columnist What goes up, must come down T After all, they are the folk who generously subsidised the he macroeconomic and geopolitical landscape has consumer in companies such as Uber, whose business model seldom looked as uniformly stark as it does now. was loss-making, but predicated on disrupting traditional After 30 years of tailwinds from China, the worlds hackney cabs, capturing the entire market and creating a workshop was shut for much of this year, with its profitable (dare I say it?) monopoly. At least that is what it looked zero Covid-19 policy imposing lockdowns across major cities and like to the uninitiated outsider. industrial zones. There is a global dearth of chips and Predictably, there are dire early warnings from operators on the components, with even a shortage of the chips to make the tech frontline. The chief executive at Uber has written a chilling machines that make the chips. Thats serious. staff letter, some key phrases from which include that some In Europe, Russias invasion of Ukraine, with its impact on the initiatives that require substantial capital will be slowed; the least global gas supply, has hit Germany particularly hard and efficient marketing and incentive spend will be pulled back; paralysed Europes engine for growth, the worlds second-largest we will be even more hardcore about costs across the board; and exporter. Elsewhere, in the UK, we stumble from the aftermath in some places well have to pull back to spring ahead. of Brexits labour shortages (and the departure of 700,000 There we have it. For growth investors and executives alike, the eastern Europeans) to Covid-induced tax hikes in the face of focus has changed from endless vistas of growth to back to basics. record inflation and rising interest rates, to a cost-of-living crisis The pendulum has swung back as it always does, from boom to exacerbated by the war in Ukraine, against a backdrop of supply bust. Feast followed by famine as winter follows summer. The chain issues and elevated freight costs. emphasis now will be on balance sheet Meanwhile, the US, the driver of strength so that any downturn or the worlds growth, is grappling with recession is merely a question of rising inflation and the first interest timing and not terminal, as it will be rate hikes in 20 years. A generation The focus has changed for companies with high levels of that has only known free money and from endless vistas of growth leverage. Recovery will come, but we sky-high tech valuations has been to back to basics first need to pay for the good times. confronted by capitalisms harshest To end on a more cheerful note, we lesson. In a recession, capital is can always rely on the indomitable returned to its rightful owners. That human spirit to adapt, survive and thrive. Things are never as bad is, from speculators and gamblers to investors and long-term as they seem, just as they are never as good as they seem. Take, grafters. An investment is only an investment if there is a return, for instance, the dire predictions of the collapse in central otherwise its pure speculation. London property on talk of deserting the city for the countryside. The Fed which, historically, has ridden to the rescue by Until, that is, a cold, boring winter pulled the young and lowering interest rates during times of crisis is now doing the able-bodied back to the excitement and bright city lights. reverse. The US consumer has a debilitating choice between a To underscore this, Shaftesbury and Capital & Counties rock and a hard place confidently spend savings and stoke Properties, owners of vast tracts of Soho, Carnaby and Covent further inflation, and consequently higher interest rates and Garden, confirmed in May that they were in advanced possibly stagflation, or prudently save and plunge the country discussions regarding an all-share merger to create a new 3.5bn into a deeper and longer recession than might otherwise have property giant. It will be focused on retail and hospitality space, been the case. Stark choices for stark times. together with office and residential accommodation in the Against this unremitting backdrop, what does it mean for the West End of London. Undoubtedly, the opening of the new markets and those tech growth stocks that powered the longest Elizabeth Line is helpful timing. After all, London survived the bull market in history, alongside the lowest interest rates known Great Plague, the Great Fire of London and the Blitz, to hold its to man? Well, the future is as difficult to predict as the weather, place as the greatest city in the world. but venture capitalists are probably the canaries in this mineshaft. 39 Impact ISSUE 38 2022_pp38-39_Lorna_Tilbian.indd 39 22/06/2022 15:56