Facing the Future
Chris Fletcher, Policy, Campaigns and Communications Director at Greater Manchester Chamber of Commerce, looks at the impact of the coronavirus and what lies ahead for the UK.
This time just five weeks ago we were preparing our 2020 Campaign for Business document, looking ahead to May's mayoral election, welcoming the good news about HS2, wondering what the nationalisation of Northern would bring, getting ready for the Budget, putting the final touches to the next few months of events, including our Annual Dinner, and launching a major membership promotion ahead of Year End. Coronavirus was on the radar screen, but surely it wouldn’t get as bad here in the UK as in other countries?
If anyone had come up with a scenario then of where we are now, I’m sure we would have shaken our heads and said 'yeah right'.
But here we are.
And as emotional and dramatic as things have been the last few weeks, I sense we are in for more of the same for some time to come.
The Chamber office is now fully closed up, staff working from home, some on furlough. Our efforts are fully focused on maintaining contact with business, helping where we can as well as listening and monitoring what our members are telling us and responding to what we are seeing coming out from government. Whilst of course staying safe and supporting official government health guidelines.
In amongst all the updates, news and schemes being announced we have started to look ahead a few months and try and gauge what things may look like and, more importantly, how we can quickly set in motion recovery measures to what will undoubtedly be a huge economic shock to the system.
We have already seen the first pass at this by the OBR with a prediction of a 35% reduction in the UK economy by June and a trebling of unemployed to around the 3.4m mark. Sobering reading and one that I fear may actually be on the optimistic side.
We literally saw virtually all our conference and events business here at the Chamber fall of a cliff in mid-March. The graphs from our weekly Business Monitor surveys have all dropped into negative territory at an alarming rate across all measures of confidence, demand and cashflow. Think about your own business and multiply that across not just the UK economy but globally too. It’s a bit grim isn’t it?
However, we cannot let this tidal wave of downbeat gloom overwhelm us. Yes, we have to be realistic, but we must also face forward. This is different to anything many of us have faced before and may require a whole set of different solutions to a whole range of different problems.
Firstly, people talk a lot about coming out of lockdown and getting the economy started again. This will be a delicate operation – it’s always easier to shut things down than to re-start them. Plus, as we all know the most dangerous time in any recession is the recovery phase when more business shut down through a lack of cash to fund sales and expansion. Whilst the financial infrastructure is more robust than in 2008 everyday cash in business is at an all-time low. Recent BCC surveys show that the majority of businesses can cover 1 – 3 months before cash dries up – and that was a month ago! So, cash is needed now to give businesses that vital lifeline.
Secondly, lets anticipate 4m people unemployed and a probable lag in spooling the economy back up again. This will mean that there will have to be some form of major government intervention the likes of which we haven’t seen before. Think Roosevelt’s new deal and the Public Works Administration - a similar scheme focused not just on infrastructure projects but across the wider community too getting people back in work, maybe extensive retraining but also future proofing the economy. Eventually, at some stage the private sector will fully kick-in again and lift the need for public funding.
Thirdly, we will probably see more “big” government intervention than we would ever expect from a Conservative administration. Let’s face it: some of the measures already in place would not have seemed out of place in Labour’s 2019 manifesto. There could be lots more of the same. But this shouldn’t come at the expense of local devolution where areas like GM can and must be allowed to have the final say on the best use of funds to maximise recovery and growth.
So big numbers, big government and big changes are maybe what lies ahead. There still needs to be a crucial role for local devolved leadership to get what’s needed to the areas it needs to. Big infrastructure still needs the final mile bits sorting out. The chill wind, that has now turned into a blizzard hitting our high streets will need radical local solutions to overcome – yes, a business rate overhaul as a starter but how about new zoning rules, changes to CPOs, radical and innovative ideas?
And, underpinning this? A strong local business community working together and supporting the communities they’re in.
This is a global issue. But where it will get solved the quickest? Right here in our communities, on the streets, industrial estates, the high streets, the shared workspaces and anywhere else that business gets done. We will get over this like we have done with challenges in the past, but we shouldn’t just try and go back to what we had or use old solutions to solve huge new problems. We have the opportunity to form a new way of doing business and we should hold onto that ambition whilst supporting each other.
Over the next few weeks we will be posting more pieces developing these themes and highlighting what else needs doing to give business the economic support it needs.