Here are a few predictions about life come December 2020: For one, lots of people will still be working at home and joining meetings via Zoom, writes John Timpson, Timpsons.
- Pandemic has broken confidence in the global supply chain
- “The tectonic plates of manufacturing and industry are about to shift” says head of one of Europe’s leading suppliers of parts and equipment
- ‘This is what our lives will look like by Christmas’
- Leading UK MD predicts: Good for local traders, more public ownership, Santa Claus behind a screen.
- Global trade braces for fallout from Trump’s escalating China war
Tensions threaten to impede recovery from the pandemic
- No job, no home, no savings. Young people may never recover post-virus
Employment prospects for young people remain bleak for years to come
- A legal right to work from home could prove minefield, says NI lawyer
- “By the time you enforce it with an appeal process and an industrial tribunal, the lockdown might be well over at that stage.”
- Hotels to bin buffets, go big on cleaning, as lockdown eases
Lavish breakfasts and other comforts will be things of the past
- Could lockdown be the death of bullfighting in Spain?
Struggling industry’s plea for government help has been met with stiff opposition from animal rights groups
- …and, finally, the world has, sort of, been here before: Never had it so bad? Plague, weather and war did worse to the UK economy
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
Martin Thomsen: The pandemic has underlined the fragility of the networks and supply chains on which so much of business and society is built. It has forced us all to fundamentally alter our behaviour and to question many assumptions about access to products and services.
For decades companies have been almost singularly focused on price when sourcing the products they need. This has led to geographic consolidation as much of the world’s manufacturing shifted from the United States and Europe to the Far East. While increased globalisation has undeniably delivered many benefits, it has also created an environment where resilience of supply was presumed rather than tested.
Security of supply is a vast issue that extends beyond PPE. During the crisis our business has been working with one of the world’s leading carmakers, producing ventilators as part of the Covid-19 response effort. Auto manufacturers are masters of just-in-time sourcing and had access to everything required to produce the units quickly for the NHS.
That is, until they ran out of something no one had thought about — a specific lubricant that was in sudden high demand. We were able to reach into our European network and get the project moving again quickly. However, it is not enough to rely on panic-sourcing at times like this. The stakes are too high.
The map must be redrawn. The tectonic plates of manufacturing and industry are about to shift dramatically as production of critical items shifts, in many cases, back towards Europe. Business leaders around the world will need to take a fresh look at the supply chains that they have taken for granted, or even forgotten about, for years.
Companies will have to reconsider the list of critical supplies that they require to operate. They will need to ask themselves whether they have access to the right supply networks to source these products. It is time for global business to bring new thinking to the supply chain questions that the pandemic has posed, and to find answers that are both sustainable and resilient.
Only if we do this work now will we be better prepared for the next crisis. Martin Thomsen is chief executive of Rubix, Europe’s largest industrial distribution business with a turnover of £2 billion annually The Times May 11
John Timpson: A few predictions about life come December 2020: For one, lots of people will still be working at home and joining meetings via Zoom. Offices will be sparsely populated, thoroughly sanitised, well regulated and totally lacking in atmosphere. Office rental values will plummet and “To Let” signs will appear in Canary Wharf.
Despite an extension to the furlough scheme, unemployment will be the highest since 1984. Companies that struggled before the crisis will disappear while others will embark on major cost-cutting programmes, only hanging on to colleagues who make a real contribution to success.
With the Government having to intervene to save vulnerable sectors including airlines and theatres, a bigger percentage of the economy will be in public ownership and we’ll have lost a number of promising startups.
Holiday adverts on Boxing Day will promote Bournemouth rather than Barbados, and Cornwall instead of the Costa del Sol. A limited number of seats, expensive fares, quarantine both going out and coming back, and check-in many hours before departure will slash foreign holidays significantly. Hardly anyone will go skiing over Christmas.
What else? The long-standing high street brands that launched “closing down sales” on Black Friday will help footfall to recover from a disappointing Autumn, while police will have to deal with crowds outside pubs.
Premiership clubs will have started to admit some season ticket holders, but gates will be reduced to a high degree – and spectators must arrive on a set time slot (hours before the match begins).
Social distancing will affect several festive traditions. Sales of mistletoe will be down, Santa Claus will speak to children from behind a screen, people will have to pull their own crackers, and outdoor theatre productions will be live-streamed on Zoom.
But it won’t all be doom and gloom. Some of the good things developed during lockdown will survive. Citizens will know their neighbours better than ever before and, for the first time, celebrate Christmas with people down their street.
Grandparents might not all be able to sit around the dinner table, but most will know how to get pictures through FaceTime. This year has already been a massive IT learning curve for senior citizens.
The over-70s will also have found their own political platform. Their reaction to an (age-related) longer stretch in isolation will have prompted younger people to listen to grey-haired wisdom before making major decisions on their behalf.
It will be a good year for local traders. Corner and farm shops, plant nurseries and local restaurants that used their initiative to provide home delivery will have discovered a new, profitable arm and captured the loyalty of their local communities.
We will have a greater appreciation of the world around us – and our gardens will have never looked better (we’ll also recognise more of the birds that visit us). We will be spared traffic jams, airport security, parking charges, high petrol prices and having to dress up. By staying at home, we’ll be helping to improve the environment.
Finally, with so much going on, most people won’t have noticed the satisfactory conclusion of some tense video-linked Brexit negotiations. The topic that dominated Question Time for five years will have hardly got a mention. Sir John Timpson is chairman of the high-street services provider, Timpson Daily Telegraph May 11
A poll conducted by the Washington-based Pew Research Center found about two-thirds of Americans have a negative view of China, the highest proportion since the think tank started the survey in 2005. Since the start of March, more than 40 bills and resolutions with a China element have been introduced in Congress.
Tensions appear to have reached fever pitch, with Trump threatening to “terminate” his trade agreement with China if China fails to meet its pledge set out in the deal to buy $200bn (£162bn) more of US goods and services than in 2017 over two years.
The obvious US response would be more tariffs, which Trump called the “ultimate punishment” – although for whom is another matter. As a Chinese Ministry of Foreign Affairs spokes-woman put it: “The facts have proved the weapon of tariffs is not easy to use. It hurts both opponents and yourself.”
For Derek Scissors, a China analyst at the American Enterprise Institute in Washington, the crisis moment for US-China relations will come in the autumn.
He says: “The point of the deal was to give Trump political credit ahead of the election. September is the time when you’re going to have a lot of pressure on President Trump. The Chinese hope Trump yaps, yaps until the election and when the sanctions come, they only last a few months.”
Paul Ashworth chief US economist at Capital Economics agrees: “The odds are the election race will remain close until polling day, suggesting the Trump campaign will keep up the attacks on China as a means of shoring up the Republican voting base.
Tensions are unlikely to dissipate even if Joe Biden wins the White House. “Maybe the style of people that Biden would appoint to key positions in his administration would be different, but the America-China rivalry is baked in the cake for the foreseeable future,” George Magnus, an expert on the Chinese economy at Oxford University’s China Centre, says.
Doug Barry, a spokesman for the US-China Business Council, says: “The American election cycle and the pandemic are sucking the remaining oxygen out of the room. With the degree of vitriol being hurled back and forth across the Pacific, the focus must be on saving the commercial relationship and keeping world trade freely flowing.” Daily Telegraph May 11
Younger people who come of age during a recession still feel the financial effects years after it is over, which means will be some of the most vulnerable to the financial aftershocks post-virus.
The number of jobs advertised for university leavers has fallen to a quarter of the level at the start of the year, according to jobs site Adzuna.
Unemployment among young people is expected to soar and will leave more than half a million 18 to 24-year-olds without work by the end of the year, the Resolution Foundation, a think tank, has said.
Those already in work are also more at risk of losing their job than others. It also found that employees under the age of 25 are twice as likely to work in sectors that have been suffered job cuts during the pandemic, such as hospitality and retail.
While the economy will eventually recover, their career prospects may not pick up at the same time. Young people entering the workforce during a recession are more likely to be earning less or be out of work than those starting their career in normal times. The same is true even five years after the downturn has taken place, according to the Institute for Fiscal Studies (IFS), another think tank.
While the financial situation may seem dire, there are ways to improve your prospects. Adzuna’s Andrew Hunter suggested young people use their time in lockdown to pick up valuable skills that could boost their career afterwards.
“There are over 10,000 jobs advertised on our site that require language skills,” he said. Roles which require European languages such as French and German typically pay 10pc more than the national average, while jobs for speakers of languages such as Mandarin or Cantonese can command much more. He also recommended they consider picking up a computer programming language such as Java.
They could look to move into employment sectors that have been given a boost by the crisis, such as healthcare services and the police. Jayne Rowley of Prospects, a graduate careers service, said that recruitment in uniformed services had been untouched by the pandemic.
“Students considering their future careers should look to careers in scientific research too, and pharmaceuticals in particular – the importance of which has been highlighted by Covid-19,” she added.
Some university leavers struggling to find work are considering enrolling in a postgraduate degree instead. However, continuing your studies does not always improve earnings prospects, and could simply end up lumping you with extra debt, says Prospects Daily Telegraph May 9
A leading NI employment solicitor believes that giving people the legal right to work from home would be incredibly difficult to enforce.
The Daily Telegraph reported that officials at the Business, Energy and Industrial Strategy Department have raised the possibility of enshrining the right to work from home in law in order to help ease the lockdown.
It would mean that staff would not be compelled to go into the office, while limiting the costs for employers who have to make their workplaces safe for social distancing.
Louise McAloon from Worthingtons Solicitors in Belfast said: “If they’re going to create a statutory right it would have to have bells and whistles around it, such as what reason would be legitimate for an employer saying you can’t work from home. There would also have to be the right to challenge that to a tribunal.
“You would create the right to appeal and potential referral claims to an industrial tribunal, which isn’t sitting at the moment and is unlikely to until July 1. How would you police or enforce that right?”
Ms McAloon added that Stormont should be identifying what types of businesses should reopen and what should stay closed and issue general guidance, as that would be the “common sense” approach.
“Most employers have embraced the concept that if people can work from home they should be facilitated to do that,” she continued.
“I think the idea of giving them a legal right to work from home is going to be fairly difficult to implement and potentially difficult to enforce.
“By the time you enforce it with an appeal process and an industrial tribunal, the lockdown might be well over at that stage.” Belfast Telegraph May 12
The pandemic has brought down the shutters on most of the UK’s hotels and when the lockdown is lifted, according to one industry consultant, there will be a noticeable gap in the dining room where the all-you-can-eat breakfast buffet used to be laid out.
Intercontinental Hotels Group, which has almost 6,000 hotels, including 355 in the UK, has already dispensed with it. Keith Barr, 49, chief executive, said: “We’ve gone entirely à la carte and pre-packaged for breakfast.”
The 109-room Metropole Hotel & Spa, in Llandrindod Wells, Powys, recently posted a telling photograph on Twitter showing one of its meeting rooms laid out under the two-metre distancing rules. Justin Baird-Murray, 55, managing director of the family-owned hotel, said that a room that could previously accommodate 130 people would now only seat 22 and he estimated that revenues for an event would be cut from £5,500 to £880.
“We can survive but only by borrowing money to mitigate the losses we make while social distancing is in place, which is not a viable business model,” he said. “If social distancing is not lifted by 2021 I seriously doubt we will be able to maintain the support of our bank.”
Andrew Sangster, editor of Hotel Analyst, said that the businesses least badly damaged would be the well-known brands offering limited service and eschewing frills such as gyms, spas and fine dining. “The big surge of interest we have seen in the last decade or so towards boutique and trendy is likely to falter,” he said. “Before, everybody wanted interesting and exotic. Now nobody wants interesting and exotic.”
With customers seeking reassurance over safety, Mr Sangster predicted that independent hotels would struggle against their better known, better capitalised big brand rivals. “Whitbread, which owns Premier Inn, is amongst the best placed in this regard,” he said.
Derek Gammage, 57, non-executive chairman of CBRE Hotels for Europe, Middle East and Africa, said: “It’s not all negative. We need a shake-up anyway in the hotel industry. There’s a stack of room stock that has had no investment and is poorly run. It won’t be a case of the banks pulling the plug but the hotels simply running out of steam. They need to be repurposed as care homes and the like.”
According to Andrew Sangster, editor of Hotel Analyst “because this is not a banking crisis but rather a supply shock that has become a monumental demand disaster, banks that have financed hotels are more likely to be willing to take back assets and hand them over to new investors. There remains a wall of money circling the sector looking for deals but most likely it will be well into 2021 before we see a lot of hotels change hands.”
With airlines forecasting no recovery until 2022 or 2023, the UK hotel sector — part of a wider hospitality industry that employs 3.2 million people directly and a further 2.8 million indirectly — is likely to have to rely on domestic customers for some time, although the corporate market may be depressed by the realisation that many meetings can now be held online.
So when will the hotel industry recover? “This pandemic is likely to change our habits until a satisfactory vaccine is developed and consumers will be cautious about using hotels until their trust is restored,” said Russell Kett, chairman of HVS London, a hotel advisory firm. “Longer term we are confident that the European hotel sector can bounce back to levels experienced in 2019, although it may be 2022 or 2023 before this is accomplished.”
When hotels finally throw open their doors again, the priorities of guests are likely to have changed. Customers who previously made a booking based on whether a hotel had a luxury spa or was next to a beach may be more interested in cleaning and hygiene protocols
Some of the big chains are forging alliances with cleaning products manufacturers and healthcare experts. Hilton has teamed up with Reckitt Benckiser, maker of Dettol and Lysol, to launch a programme that in America, where the hotel sector remains open, has been named Hilton Cleanstay. The group said the scheme would bring RB’s scientific know-how to bear on its cleaning practices while infection prevention experts from Mayo Clinic would advise on “enhancing Hilton’s cleaning and disinfection protocols”.
Measures in guest rooms will include extra disinfecting of frequent “touch-points” such as light switches, door handles, TV remotes and thermostats, while the company is exploring new technologies such as electrostatic sprayers, which use an electrostatically charged disinfecting mist, and ultraviolet light to sanitise surfaces.
The draft protocols being drawn up by UK Hospitality, the trade association, include not only enhanced hygiene and sanitation during a guest’s stay but also a deeper clean between stays. The Times May 11
Just as Spain’s bullfighting season was set to kick off the country was plunged into lockdown.
The estimated loss of income so far is at least €700m (£797m), said Victorino Martín, a second generation breeder of bulls, who also heads the Fundación del Toro de Lidia, which was created in 2015 to defend the industry. “Even more concerning is that we don’t know when we’ll be able to restart our activities,” he said. “Meanwhile, the animals continue to eat. You have to take care of them and the employees.”
But with little chance that crowds will be allowed to return to the streets for bull fiestas or into arenas for bullfights, he was steeling himself for his worst-case scenario: cancellation of the entire season.
A handful of breeders have already given up, he said. “There are some who have slaughtered all of their animals … I know there was a week where more than 400 were killed.”
The economics of that make little sense, as it can cost up to €5,000 to rear a bull while the slaughterhouse pays €500, he noted. But for those who have bulls that will outgrow the strict age limits on bullfighting and street festivals if they are not used this year, it is one of the few options.
The Unión de Criadores de Toros, which represents the interests of some 345 breeders of fighting bulls, estimates that more than 7,000 bulls had been raised for this year’s season.
The industry has turned to the Spanish government for help. Their request has been met with stiff opposition. More than 100,000 people have signed an online petition urging the government not to use public funds to prop up bullfighting. Similar petitions have been launched in Portugal and France.
Aida Gascon of AnimaNaturalis, a Spanish animal rights groups said that what they want “is the total abolition of this practice of torturing animals as a form of spectacle. One way to do that is to choke off their subsidies … it wouldn’t get rid of the industry completely but it would reduce it to 5% or 10% of what we have today.” Guardian May 12
For anyone pondering how the coronavirus outbreak is about to deliver the British economy’s worst year in modern history, only a handful of things have wrought such severe and sudden damage in the past: weather, war and pestilence.
The Bank of England has put forward an “illustrative scenario” that saw a plunge in output of 14% in 2020 – albeit followed by 15% bounce-back in 2021 – the worst hit to the economy in more than 300 years.
Two very bad years stand out in British history: 1706, a year of weak harvests and weak trade, when the economy contracted by around 15%, and 1709, the year of the “Great Frost”, when the economy shrank by 13%.
“There has been this unusually large period of 300 years during which the British economy has not suffered such major disasters and that is very uncommon,” said Albrecht Ritschl, professor of economic history at the London School of Economics.
One catastrophic event stands out in European history: the plague in the 14th century that lasted about 100 years and led to vast economic changes.
“The impact was absolutely enormous: if you survived, it was a bit like winning the lottery. Wiping out a third of population, but the amount of land and capital was unchanged, so each survivor had more capital and land. Real wages went up and, in the case of Britain, they stayed up.”
Another disaster is the 1918-19 influenza pandemic, which led to a vast loss of economic output. In the United Kingdom, it killed around 228,000 people, according to patchy data.
“We had this post-World War One recession and we all blamed it on monetary causes – the attempt to unwind wartime inflation and go back to the Gold Standard – but now we will probably have to rewrite history and say it was not money but really the Spanish flu,” said Ritschl. Reuters 7 May