Editorial: Business Challenges More than Just Hot Air
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An at times uncomfortably hot summer recedes in the rearview mirror as we advance into the fall. But as the days draw in and the temperatures drop, it seems inevitable there will be plenty more uncomfortable days ahead.
The United Kingdom, or more accurately the Conservative Party, has changed leader with Liz Truss taking over as the new Prime Minister on September 6. Commentators have described her inheritance as “an intray from hell.” I was interviewing a Hungarian CEO the other day, and it struck me that this might be the most challenging time to do business since the 1970s and possibly trumping even then. The energy crisis back then must undoubtedly have been traumatic to live and work through (I have only my parents’ horror stories to judge by), with the threats of blackout prompting energy rationing and shortened work weeks. The inflation at the time was no joke either, but at least there was no state-on-state warfare raging on the European continent.
The economic headwinds may not be legion, but they are several and could be overpowering. The pandemic has slipped down the news agenda, but it hasn’t gone away, and as we work through September and into Q4, there must be a real danger that a new wave could return, along with the flu season. (And a word of warning on that front: Australia is the bellwether for Europe when it comes to flu, and the season there started earlier this year, meaning it may well do so here, too.)
Supply chains have somewhat recovered, but it would not take long for more lockdowns in China, say, to disrupt them again. Then we have inflation, which shows no sign of slowing down anytime soon. Hungary has a particular challenge all of its own in coping with near full employment and the constant battle to source adequate workforce. This appears in all kinds of areas. There are not enough GPs or teachers, for example. In the latter case, there is, in particular, a shortage in the natural sciences and IT. And talking of IT, that sector may have its own worries to confront soon, with large numbers of professionals reportedly considering a move abroad on the back of the changes to the simplified tax regime known as Kata.
Perhaps the biggest worry, though, will be energy, despite government assurances that enough gas has been sourced to mean “people will be able to heat their homes during the cold winter months, and the Hungarian industry and economy will remain functional,” to quote State Secretary Tamás Menczer. Having the gas is one part of the equation. Knowing how much it will cost is another.
Energy, and the many questions surrounding it, will be the topic for our next CEO Breakfast Briefing, in partnership with the German-Hungarian Chamber of Commerce and Industry at the Anantara Hotel New York Palace on September 28. But I suspect it will be a matter that we come back to again and again for the remainder of this year, at the very least.
Keep well, keep warm and carry on!
Robin Marshall
Editor-in-chief
This editorial was first published in the Budapest Business Journal print issue of September 9, 2022.
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