Post-virus everything is going to change. That’s the dominant view of national and international media. But how exactly do they see the future? This regular digest section gives some of their answers and views/Edited by George Hamilton
In this edition (28 Apr)
Fix inequality – or it will fix you
Three pieces with the same theme: the virus is throwing the inequalities in society into stark relief, and governments and companies may be forced into action.
Paying for fighting Covid-19
With a predicted budget deficit of £273 Billion, Britons will be paying for the next 20 years for the anti-virus economic measures
NI hospitality ‘cash cow’
Newton Emerson argues the local hospitality industry, essential for a modern economy, is being unfairly penalised, and this needs to change in the future.
Worried consumers, post-virus, could go for local products
Experts says people will want local brands which have crossed fewer borders – and been through fewer hands
Virus is changing Ireland’s food
Fear of the virus is driving Irish consumers towards healthy, immune boosting foods.
Coronavirus could kill cash in ‘months not years’
Withdrawals from ATM’s have fallen by 60 pc since the virus hit. Now the fight is on to save all the free-to-use machines from disappearing for good.
INEQUALITY #1: We be in this together, but that doesn’t mean we are in this equally
Paul Johnson: We are not all in this together when it comes to the social and economic consequences of the virus and our response to it.
In most respects, the younger generation are having the worst of it — and they haven’t had an easy decade up to now. Recent work at the Institute for Fiscal Studies has shown that workers under the age of 25 are two and half times more likely than those over 25 to have been working in sectors such as hospitality and (non-food) retail that have closed entirely.
If young workers look badly affected, the situation for low earners in general looks even worse. The lowest-earning 10 per cent of workers were fully seven times as likely as the highest earners to work in sectors that have closed. They are also much less likely to be able to work from home.
Government interventions through the generous furlough scheme will do a lot to cushion the blow for many millions in the short term. Sadly, the fact that an extraordinary 1.8 million people have made new claims for universal credit within the past month is evidence enough that many have not been protected by the scheme.
The present situation does not only risk exacerbating inequalities among adults. Among those still at school, effects are also likely to be socially graded. Recent work from the Sutton Trust suggests that secondary school-age children at private schools are two and half times as likely to be getting daily online teaching as are those at state schools. We also know that protracted periods out of school are particularly damaging for those from poorer backgrounds.
The state has found itself stepping in to insure and protect many millions of people on a scale unimaginable a few weeks ago. Even so, the world post-Covid-19 is likely to see many existing inequalities magnified. It may also see long-held assumptions about the security and value of private wealth challenged. It should lead us to reassess the value of mutual insurance, an effective welfare system and collective economic security. Paul Johnson is director of the Institute for Fiscal Studies The Times 27 Apr
INEQUALITY #2: Parliament may compel companies that don’t act on executive pay
Oliver Kamm: In recognition of workers’ sacrifices, some business leaders are voluntarily taking big pay cuts. Ana Botín of Santander is giving half her pay for this year to a medical equipment fund.
The economy is now in an even greater crisis than during the banking crash of 2007-09. The issue of executive pay is likely to become more prominent. It would be wise for big companies to follow Ms Botín’s lead, otherwise government will have a case for legislation to compel them. The Times 23 Apr
INEQUALITY #3: Clapping for the NHS is starting to disguise deeper problems
John Kampfner: With the exception of senior doctors, very few of those working on hospital wards or in intensive care units have working conditions and wages that are remotely commensurate with the work they do. The same applies to many in other jobs that are deemed essential.
What about the broader question of value? Should society take an instrumentalist view about the importance of types of work?
If the answer points to a new way of assessing contribution to society, how can that be done? We know who the pantomime villains are: the hideously overpaid chief executives, bankers, heads of monopoly utilities and assorted tax avoiders. We can all suggest individual jobs, perhaps entire professions, that we judge less important than others, or not important at all. But we won’t all agree on what they are.
Should we at least attempt such an exercise? Some would regard that as dangerous, as anathema to a free market and a liberal democracy. Most of me is inclined to shudder at the notion. Yet there is also something tempting about determining the social value of work.
For the moment, we can agree on one thing: in our current system there is very little correlation between real labour and real reward. The Times 24 Apr
‘Britain will pay for Covid-19 measures for decades’
The UK’s recovery from coronavirus is likely to be slower and shallower than first hoped and Britons will be paying for action to save the economy for the next two decades, a former Bank of England rate-setter has warned.
Ian McCafferty – who sat on the Bank’s Monetary Policy Committee (MPC) for six years until August 2018 – said if the lockdown is lifted gradually in phases as expected, the economy could take at least six months to get back on track.
He said households and businesses face the grim prospect of tax hikes and austerity to cut Britain’s ballooning public deficit once the immediate crisis is over.
“We will have to pay for the fiscal action that’s been required – over the next 10 to 20 years, fiscal policy will have to adapt,” he said. “Growth will not be sufficient on its own.”
Current members of the Bank’s interest rate-setting committee have been alerting over the size of the economic hit – with one saying last week it would be the worst economic slump for several centuries.
The cost of the actions to keep the economy on ice have also been in sharp focus, with the independent fiscal watchdog estimating the budget deficit could soar to £273 billion in 2020-21 – the largest single-year deficit since the Second World War. ITV 27 Apr
Stop using hospitality in NI as “cash cow”
Newton Emerson: The hospitality industry employs 7% of Northern Ireland’s workforce, generates more direct income than agriculture, and takes in 60% of all tourism spending. Its wider benefits are incalculable. Modern creative and hi-tech industries require young professionals, who in turn require a certain standard of urban living. This is understood by policy-makers and politicians.
Coronavirus could easily return [Belfast] city centre to its Troubles-era sterility. Although much of the economy might bounce back in months, there is little hope the hospitality sector will. Social-distancing measures, which could continue on and off for years, will be manageable in factories and shops but not in nightclubs and music venues. Cinemas and theatres could remove seats and install partitions, but would they not also need subsidies for lost revenue?
Property rates make up almost all council income in Northern Ireland and are Stormont’s only significant tax-raising power. Half of the total is levied from businesses. In January, a revaluation increased bills for bars and hotels in Belfast by 50%.
This was already squeezing the life out of towns and city centres. Now it is plainly unsustainable. Once any rates holiday ends, the days of treating hospitality as a local government cash cow must also end — for good. Sunday Times 26 Apr
Cautious consumers will look for “hyper local” products
Consumers could hold back spending either through a lack of choice during a lockdown, by precautionary saving ahead of another shock or by avoiding places that risk infection. A YouGov poll last week found that more than half of Britons are uncomfortable about returning to pubs, restaurants and cafés when the lockdown ends.
Coronavirus could accelerate existing consumer trends or create entire new ones. Analysts expect the shift to online shopping to be hastened as households rely more on deliveries during the lockdown, while health and wellness products are expected to receive a boost. And lockdowns could lead to more remote working, meaning less transport usage, more online classes and weaker spending on corporate events.
Ackerman says that consumers will return to brands they trust and locally produced products.
“Covid-19 is likely to be an accelerator of that hyper localism because I think at the moment consumers are wary about products that have gone through too many borders and hands touching them.”
But the most important consumer trend for the economy will be caution.
“People will want to prepare for this, and the way to prepare for this is to have a significant stash of cash,” says Gilles Moec, chief economist at AXA. “If you factor in the possibility of another lockdown in the third or fourth quarter, do you want to change your car now?”
That could mean a full recovery in consumption will not be made until a vaccine is produced.
Worse yet for economies would be an annual coronavirus wave, likely every winter. “If this is annual, it really will change the way the consumer behaves. The more it comes up the more risk averse the consumer will become,” warns Ackerman.
Could coronavirus scare Britons into becoming a saving nation, like Germany? UK households are less thrifty than some of their international neighbours, with an average of 6.2pc of disposable income parked away for a rainy day at the end of 2019.
Dame Kate Barker, a former Bank rate-setter, suggests 2021 “will be a cautious year”, but adds: “Beyond that, the post-financial crisis experience did not suggest a permanent change in behaviour on savings – many don’t save as they just don’t have the money.”
Her former colleague on the monetary policy committee, Andrew Sentance, agrees, arguing that the impacts of social distancing in restaurants, for example, or changing attitudes towards office working could be longer-lasting than broad macro changes in consumer attitudes to savings in the wake of coronavirus. Daily Telegraph 25 Apr
Virus changing Ireland’s food
‘We have seen people go back to what they grew up on, things like roast dinners,’ says Rory McDonnell, Bord Bia’s head of strategic planning
“We are in the middle of one of the biggest social experiments in our history and it will be fascinating to see how we change as a result of it,” he adds.
McDonnell and his research team have been looking at what consumers have been actually doing and what they have been buying. They have already identified some key trends, one of which they have labelled “shielding”.
The chocolate-soaked protein bars which might possibly have made us lean ahead of the summer are out and have been replaced by immunity-boosting shots of green vegetables and fruit.
There is no vaccine and a huge awareness that if this terrible thing can happen today, it can happen tomorrow too. That bleak picture will “create great desire for shielding and self-protection”, he says, and foods which can protect our defence systems are growing in popularity.
Certainly if search engines are anything to go by, that is what we have been looking for over the past several weeks, with Google searches for “food” and “immune system” spiking since mid-March.
But, the research warns, before brands rush out and starting making claims about their products’ benefits for the immune system, they will need to “be mindful” that in a world of fake news, their “message needs to be actually true”. Irish Times 27 Apr
Coronavirus could kill cash in ‘months not years’
There are now “months not years” to rescue the UK’s creaking cash infrastructure, the chief of an influential review has warned, after new research revealed coronavirus could change spending habits for good.
Link, the biggest operator of free-to-use ATMs in the UK, has previously warned it would struggle to maintain its network for longer than two years without intervention from the Government.
But Natalie Ceeney, who chaired the Access to Cash Review, warned that the pandemic has made action more urgent than ever.
“We need to keep the cash network viable”, said John Howells, the chief executive of Link He said withdrawals from cash machines had fallen by 60 per cent during the lockdown and he estimated that just half of that decline will be recovered after the pandemic has passed.
He said: “What [the pandemic] is doing is speeding up the process. What the Access to Cash Review predicted in five years will now happen in five months.”
According to a survey commissioned by Link, 72 per cent of people said the virus would affect the way they use cash; with half saying they would use cards more, 39 per cent saying they would use mobile or contactless payments more and 27 per cent saying they plan to use ATMs less frequently. Daily Telegraph 24 Apr
