The macroeconomic backdrop has been turbulent this year, with wars and elections contributing to a palpable sense of uncertainty. During the event our panellists discussed what might come next.

2024 has been a year of elections, with around 60 countries going to the polls. It’s also been a year of looser monetary policy, with many central banks (with the notable exception of Japan) starting to cut rates. The other key theme has been geopolitical uncertainty, with the Ukraine/Russia and Israel/Hamas conflicts rumbling on. “Elections and central bank policy shift have translated into trade fragmentation,” one expert said.

When president-elect Donald Trump enters the White House for a second term his protectionist ‘America First’ policies are likely to result in increased strain in the US’s relationship with China if he imposes increased import tariffs. This could result in an escalating trade war between the two countries, which would have implications for how global trade is structured.

 “The biggest risk is just Trump doing what he says,” according to one of our panellists. “If he actually does put these 60% tariffs on China, or if he imposes blanket 10% tariffs across the board, that’s equivalent to a 1% tax on every person here, so that’s a real risk.”

Another panellist highlighted that tariffs would probably be inflationary for the US economy. As such they have big implications for monetary policy, as the Federal Reserve may not be able to cut rates as much as it may have done otherwise. 

How much Trump cuts taxes will also be important for the US and elsewhere in 2025. As a panellist stated, “Protectionism is here to stay and it’s going to have big implications for monetary and fiscal policy.”

Closer to home, Chancellor Rachel Reeves delivered Labour’s first post-election Budget on 30 October. She had to walk a tightrope of “increasing spending but not spooking government bond markets by borrowing too much”, according to one of our experts. 

Did she get this tricky balancing act right? The Budget wasn’t a disaster like Liz Truss’s and Kwasi Kwarteng’s mini-Budget as most of the announcements were well flagged. However, the panel noted that given the nature of the Budget there’s going to be rather high gilt issuance in the years to come, and that the market will need to absorb this extra supply somehow.

A Europe specialist at the event pointed out that it would be important to watch the shift to the far right in France, Germany and other countries in Europe in 2025 and beyond. In particular, with the possibility of a snap election in Germany coming up, this political dynamic could have major implications for governments and how they approach voters, the labour market and other important issues.

In short, investors will need to bear in mind the political risk premium priced into markets as geopolitical uncertainty persists. 

Why should treasury teams spend time developing their relationships with banks? NatWest specialists have experience of both treasury and the banking side. During our discussion on the topic, they explained it’s all part of ‘being prepared’ – an essential attribute for any treasurer. 

As one of our panellists put it, “You need to plan ahead, and part of that planning is to have your banks on side”. In practice, this means teams need to work closely to build up mutual understanding and get to know each other’s challenges and ways of working. 

Business-to-business and team-to-team interaction is vital if a working relationship is to be successful, and everyone has a role to play. The aim is to build up a relationship based on trust and transparency.

The panellists considered what a treasurer might take into account when selecting a bank. The right choice will depend on the nature of their company, its geographic reach, the sorts of products they want to use and their level of risk aversion. 

“It's a case of, from a treasurer's perspective, really understanding where your business is and then looking for banks that actually meet your needs,” one expert said. There is also a ‘softer’ element of cultural fit. The aspirations of some banks and their willingness to lend, for example, might be very different to the needs of your company. “That doesn't mean that you never talk to that bank, but you recognise them for what they are and make an informed decision based on that.” 

A good match in terms of product and geography is key. 

Ideally, a banking partner should understand the treasurer’s business and act as a close partner when there are problems to overcome. It might sound a little thing, but the panellists felt that being able to pick up the phone and talk rather than relying on emails was an important aspect of a good relationship – especially when the treasurer needs help with a time-sensitive issue. 

One panellist – the former Cadbury treasurer – worked there at a time when it had a ‘nightmare’ milk contamination issue, which could have meant pulling a huge amount of product off the shelves. As soon as the problem became public knowledge, several banks phoned her and offered their support if needed. 

“As it turned out, we didn't need them,” she explained, “but the fact that they were brave enough to make that call and they felt they understood the business well enough to do so earned our respect for years. That’s a real-life example of how building those relationships for you as a corporate is incredibly valuable.”

So how can treasurers and bankers foster those relationships that can be so useful during ‘black swan’ events or time-sensitive crises? The panellists emphasised that, whatever your level within your organisation, the power of a solid network can’t be understated. Build yours slowly, with good intentions, and remember, as one panellist stated, “It’s a marathon, not a sprint”.