Mr. Hammond in his autumn statement today has based his calculations on the need for the economy to grow. Budgets in modern times have this requirement built into them. However there is a flaw in this that needs to be addressed – the limitation of only having one planet’s worth of resources with which to make and transport the goods and supply the energy needed for manufacture, to create the wealth, to grow the economy.
David Suzuki explains here https://www.youtube.com/watch?v=bsd1IT7ySfE why ‘exponential’ growth cannot be sustained, and provides a useful illustration of the resource challenge we face.
Resources under pressure
Some things are running out.
For instance copper used in electrical wiring, data cabling, vehicle radiators, heat exchangers, ammunition and plumbing. Research has calculated that reserves of copper could run out by the 2030s. Of course it won’t literally run out but will become very expensive. We already see increases in metal theft when the cost of scrap metals reach high levels within ‘normal’ commodity price fluctuations, what will be the implication to business of extreme price increases?
Some things are rare
Rare earth elements found are found in many things important to our modern lives: televisions, mobile phones, computers. They are called rare for a reason.
Some things are only found in countries that are geopolitically sensitive.
Many rare earth elements are only found in China, there could be a scenario where the current moves towards trade barriers and tariffs yield unwanted restrictions and cartels for critical materials.
Some things are being used too quickly
For instance oil, according to the BP Statistical Review 2015, we have for many years, consistently been consuming more oil than is being produced. This is inevitably using up strategic reserves across the world. Oil won’t run out but as it becomes more difficult for supply to keep up with demand the price will increase. As David Suzuki demonstrates in his analogy, the price and availability of oil may look good now, but that doesn’t mean the crunch point is far away.
Globally we need to be moving towards a circular economy so that recovery and recycling of such materials is built into the products we buy. We need to be moving away for our reliance, especially for transportation, on fossil fuels.
This is a global problem, we need to work collaboratively. Our leaders have a responsibility to protect us from possible future instability and the chaos it could cause and work towards an economic system that is resilient and protects us. What will be the straw that breaks the camel’s back and as a business will you be ready for it?
If you would like to discuss the circular economy or potential risks in your supply chain please feel free to give us a call on 01746 552423 or email