The big picture: Economic expertise at S&W

Jonathan Gillham is a partner in S&W’s new economic advisory team. He started his career seconded to the Department for Culture, Media and Sport working on the successful London Olympic bid. He soon moved back to the Treasury, however, where his models helped inform economic forecasting and the Budget process. He was also the Treasury’s lead on tax. 

After leaving government, Gillham spent more than a decade working with clients across industries, helping them understand how government policy could impact their markets. Alongside this, he also brings significant experience using economic analysis to support clients in damages claims, arbitration and disputes.  

My PhD involved a specialist form of macroeconomic modelling that’s used quite widely now to look at very large-scale government policy measures. One recent piece of work I’ve done was to look at the economic impact of HS2, the high-speed rail project.  

During my time at the Treasury, though, in the aftermath of the financial crisis, the big focus was on fiscal consolidation – what we now know as austerity. There was a recognition that the government needed to pull on some big tax levers, and the question was how to do that with the least possible damage to the economy. My modelling was a significant influence on those decisions.  

Short-term economic data, such as GDP growth, inflation and employment figures is vital to the financial markets, but what matters for most businesses is a better understanding of what’s driving that data: Is the employment in certain regions and sectors? Is the economy being driven by high consumption, government spending or exports? Issues that will impact their business. 

What the modelling brings is a better understanding of how the economy might evolve over the next two, three or five years, more than whether GDP growth next month will be 0.1% or 0.3%. That increased understanding can then feed into business plans. They can make better investment decisions, perhaps better understand where their revenues originate from and manage their supply chains more effectively, for example.  

One of the exciting things about working with economics in a business that does audit is that it brings a particular practical rigour and transparency to the process.  When you’re connecting with CFOs, you get a new appreciation of how these factors impact different businesses.  

That’s part of it. More recently in my career, I’ve also been working with businesses applying economic analysis to commercial disputes.  

If a business suffers a loss, it can be important to determine the factors contributing to that loss. For example, in a case where a business fails following a breach of contract, we might look at the wider economic conditions, its business plan and the other factors to determine if the breach was responsible for the firm’s collapse. 

It might mean working to understand the market conditions and how the macro economy impacts it, which is where my modelling and analysis come in. It may also mean exploring how the business itself was run and examining its accounts, which is where we can work with the forensics team at S&W.  

And, of course, that can feed back into our broader consultancy work. As you gain those insights on the internal and external influences on the business, you can work with CFOs on other challenges, whether it’s factors affecting their growth or if they have the right checks and balances in place.  

There’s always cause for optimism, but the government badly needs a more structured plan around research, development and investment, and helping businesses adopt, implement and use AI. 

That’s particularly true in smaller and medium-sized businesses. Big businesses may have an AI division, but others need more support. We should look at countries like South Korea, for example, with its special economic zones, where businesses connect with universities and influence their research. Innovation is hard, and it’s difficult to do. The government can talk about it, but you need to link people together. 

And the other thing that we need for growth is stability. Businesses don’t necessarily always argue for lower tax rates, but do want certainty so that they can plan properly.