Issue - meetings

Bob Swarup (Independent Advisor to the Sub-Committee) presented this report which provided a six-monthly update on factors influencing the Pension Fund from a macroeconomic perspective. The report focused on four key areas: negative real interest rates in the UK; inflation, including supply chain issues; geopolitics; and investors’ capital deployment. Attention was also given to the implications of the war in Ukraine.

Members praised the quality of the update, stating that the macroeconomic forecast presented some daunting prospects. 

In response to Councillor Simpson-Vince, Dr Swarup advised that deglobalisation was a forecasted trend, characterised by nations seeking to withdraw from supply chains outside of their control. Energy security presented a challenge, evidenced by US and European interest in accessing oil and gas resources from Venezuela to break free of dependency on Russia. Bilateralism was an emerging trend as nations acted for themselves. He stated that with risks came opportunities; nuclear power was likely to experience a renaissance, alongside investment in resources to achieve efficiencies and improved security, such as vertical farming.

In response to Councillor Kettle, Dr Swarup stated that a positive outcome could result from China choosing to prioritise trading interests with the West. However, China had demonstrated a limited regard for the interests of other nations and was focused primarily on its own ambitions. It was prudent to plan for both scenarios to protect the interests of the Pension Fund.

Philip Pearson (Hymans Robertson) advised that deglobalisation could lead to higher inflation. It was prudent to consider how all possible scenarios could impact upon the Fund.

Resolved:

That the Pension Fund Investment Sub-Committee notes the content of the report.