The economic impact of Covid-19 will lead to swathes of people being made redundant and many businesses closing down. This is a fact we all need to accept. The chancellor was direct in his choice of words when he said it was the beginning of a recession in the United Kingdom.
The retail sector is one of the worst affected. Last year alone, prior to the pandemic, some 16,000 stores shut down on the UK High Streets. Strict social distancing rules, enforced non-essential shop closures and low consumer confidence will accelerate this trend. As someone who runs a small retail business myself I have witnessed this first hand.
Measures such as relaxing Sunday trading hours, although timely, won’t help the small businesses and will in fact put more pressure on them, with the retail giants most likely to benefit. Having European style open cafes and the councils permitting the hospitality industry to sprawl on their land is a well thought out short to mid term option for getting the hospitality industry back in action.
The Aviation Industry, operating on tight margins, has also suffered a collapse in business during the pandemic. BA is at loggerheads with the unions over its proposed job cuts and is threatening to sue the government over its 14 day passenger quarantine rule – this is another sector that will see a Darwinian shakeup. And the government is doing what it can and is safe, to cushion the impact as ticket sales continue to drop.
ONS figures (April) show that UK businesses had furloughed 21% of their workers. Time will tell if this “job retention” scheme was precisely that or if it supported in the short term “zombie jobs” in businesses that will be laying of staff as soon as it ends. With the side effect of pushing the UK’s fiscal deficit to record peacetime levels. The government has borrowed more in a single month than it had planned to do in the entire year before the pandemic. Need of the hour, though debatable.
The future of the UK lies in tech and innovation. The government should be more proactive in encouraging this; re-evaluate skills set, tech start-ups, innovation companies. The UK has a huge talent pool, we are innovators and inventors by nature. Use that, invest in them and kick-start a new era based on artificial intelligence, e-commerce and the tech economy.
The country and the government will have a tough few years as the economy is revived. Leaving the EU might add to the complications. Austerity will not be the answer this time. This pandemic has accelerated a megatrend that was in already in force. The government will need to be embrace this change, be nimble, target their spending, encourage new industries, reskill workers, and make the UK a more friendly place to do business and build those trade relation with the commonwealth, USA & others (including China) if they wish to keep their place as a leading economy.
Not very long ago, Boris promised a booming economy, a robust plan to get more people in jobs, better business infrastructure , more opportunities through levelling up. The public isn’t very forgiving and though it isn’t entirely a government's fault how the economy reacts to natural disasters such as a pandemic, the onus will be on the Prime Minister. And before we know it'll be 2024.
Kanwal Gill, Diversity and Inclusion Expert