This is the greatest economic and mental challenge for a generation. It will see many new ideas and thinking. Are we ready?
There has been a subtle change this week from adapting to be in lockdown and the loss of daily business challenges to now many beginning to plan for the future. This is positive but still the greatest challenge that we all have to deal with will lie with the mental and financial effects of this crisis rather more than the physical.
A number of thoughts:
Reports are coming out that the economic loss on GDP could lie at between -10% and up to -15%. To place this in context, the overall worldwide GDP loss of the great crash of 2008/9 was -1% GDP and the forecast loss is the same as the Great Depression. The Great depression loss was over a 3 year period between 1929 -1932. This crisis is seeing the same lost over a 6 month period. It will mean lost wealth, lost companies and lost jobs which we will not see till after the Furlough period has expired. This will naturally impact on:
o High financial stresses on millions
o Higherlevels of depression and mental illness.
o Loss oflife
o Broken spirits
The economy is not designed to just bounce back after such a shock and it will take time. It is estimated that it may take up to 5 years to return to the levels pre-lockdown.
It is expected that many events businesses will see a fall in revenues by between 40-50% min in 2020. How will this impact on the largest venues and stadia?
For the Hospitality industry, a number of further questions are posed:
o We are presently being taught – however reluctantly –that we need to stand more than 2 meters apart. New habits are being formedwhere we are less open, less tactile, even less trusting. How long will it takefor this to leave the way consumers may behave?
o How longtill one is happy to sit in a large football crowd with someone who has acough? Will football stadiums have social distancing if they return as plannedin June?
o Willrestaurants need to remove a number of tables so that there is socialdistancing between tables?
o How longwill it be before people are happy to openly socialise again at events?
o Will peopletravel as they once did before? For holidays, maybe. For business? Probably farless and how many airlines will be lost?
o Willbusiness hotels now expect to see lower occupancy levels as a business is nowproven to be actioned via Zoom, Skype and Microsoft meetings?
o Hygiene and cleaning costs will naturally increase and is forecast to double. Which budgets will be cut as a result? o It is expected that there will be a 25% increase in home working amongst professionals post-crisis. How will this impact on spending in cities – in restaurants, in cafes, within buildings? In events?
This does paint a bleak picture and it will be a challenge. Arguably we face a challenge as large as bringing together the Great Depression and the Second World War together? It will be a tough challenge for all.
There are positive though:
· There is anew focus on family life and communities.
· There are manycompanies that are showing great skill and care for others
· There will be awhole new generation of young learning how to cook at home
· The argument isthat the environment and the desire for fresh food produce will be winners
· There is a new level of interest in investing in education and care for the young · There are investors seeking to invest at this time
Given all the above, how does one plan for the world that follows? It is just not that easy. It will need new thinking, new ideas and new solutions. It will see new players emerge; established players fall. We will see new values break through and new leaders emerge.