The Government is coming under increasing pressure to outline a strategy for bringing the economy out of the coronavirus lockdown. London audit partner, Martin Jones, considers what could happen in the aftermath of Covid-19 and where we go from here.
What will life after lockdown look like? In truth, no one knows, other than the fact that the economy in Q2 is going to be trashed. Inevitably some individuals and sectors will come off worse than others. The hospitality sector, for example, has been decimated – forced closures resulting in revenues falling off a cliff. Others, such as supermarkets and toilet roll manufacturers, however, have fared pretty well.
Despite the uncertainty and challenges ahead, it does not stop us putting on our visionary hats and speculating about the future.
I have read and listened to a few ‘experts’ and as always there are divergent views – some suggest a V-shaped recovery with a quick bounce back for the economy, others suggest it will take a few years before things return to ‘normal’. So somewhere in between - perhaps we won’t ever go back to ‘normal’, whatever that is.
After the darkness comes light, and I’m hopeful that this biggest of challenges for us all will see many new ideas and ways of thinking, and a time to reset our values. With the closure of most shops and wide restrictions on travel, we have seen a focus on family life and the local community and binding those relationships at home and closer to home. The divisions caused by Brexit will subside further. I suspect that there will be more reliance on local supply chains in the future, and more ‘on-shoring’, as businesses seek to become more resilient and less dependent on far-flung suppliers and call centres – survival will be just as important as profit. Globalisation will take a back- seat for a while.
Social distancing measures are likely to continue in some form after the lockdown is lifted, eg. restrictions on the number of people in shops and continued queueing outside supermarkets. Can we vary the ‘rush-hour’ for commuting? In truth it is crazy that the majority of people cram onto tubes and trains at the same time on weekday mornings and evenings. Wearing masks may be required when using public transport. Easy-Jet has announced it will keep middle seats on flights empty to cut the virus risk – cue increase in air fares. How long before people are happy to go out to watch a film or a football match with the prospect of someone coughing in the row behind them?
The lockdown has killed off the sceptics of working from home as it has shown that many businesses can continue to function in such an enforced environment. For UHY, technology such as Microsoft Teams has allowed meetings to continue both internally and with clients. Clearly there is a need to have the interaction in the office, but as it is now proven that business can be done via Zoom, Skype and Microsoft Teams, why do we need to be travelling around so much? Long-distance travelling for business is likely to reduce significantly – what is the point of sending a salesperson on a long and expensive trip when the technology is there to do the same thing remotely? Less travel will reduce carbon footprints as well and help deal with climate change.
I believe there will be an increase in home working amongst professional service firms in the future, which will be particularly beneficial for those with young children juggling childcare. Work performance is more about productivity and effectiveness not presenteeism – we are probably only effectively productive for half of the day in the office, with so much time spent in meetings and dealing with e-mail and social media overload. Firms will reduce office space and hence rental costs. Perhaps Jack Ma’s prediction of a three day week enabled by AI is not that far-fetched?
Only by ending the lockdown (when ‘safe’ to do so) can we bring the economy out of hibernation and back to life, but how we do it and when we do it, will be vitally important. It is a huge decision around such a trade-off, but at least in the UK, we will have the benefit of seeing how things pan out in those other European countries which are taking that step earlier.
One of the consequences of a recession is that it sorts out the wheat from the chaff. Unfortunately in this case, we will undoubtedly see a number of causalities in the hospitality, leisure and retail sectors, which have been particularly badly hit through no fault of their own. More generally, however, resilient firms with quality people tend to survive, and I believe those businesses will come out the other side of this stronger, thanks to both thoughtful leadership, committed staff and government support where necessary all helping to keep the wheels turning during these difficult times.
Green and resilient is the way forward!
