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Ten thoughts from ten weeks of lockdown

Some reflections on what (at the time) was ten weeks of staying in...

Right, as (rashly) promised.

In a previous blog, I said I would offer some reflections on what, at the time of inspiration, was ten weeks of lockdown.

I was prompted by the symmetry of a two-year-old post musing on the impact of the credit crisis ten years on and wondered what difference mere weeks would make. A considerable one, as it turns out.

Disclaimer: no-one really knows what’s going to happen but these observations try to make some sense of what we face.

1. Deflation looms

Governments will need to keep spending to stave off deflation. Markets have already priced in this prospect (you can see it in the widening spread between 30-year Treasury bills and shorter-term debt, where the concern lies over the repayment over the coming decades, not upcoming months).

On the macro-level, this ought to be a co-ordinated, global effort - much as it was in the aftermath of 2008. But where is the global coordination now?

At a more everyday level, it’s hard not to see a scenario of people delaying big purchases like houses and cars in the expectation that uncertainty plus over-supply will lead to further reductions.

But pausing indefinitely will stall the hopes of some sort of recovery to the consumer and wider economy, hence the headlines have tended to focus on keeping construction - and estate agents - going, plus apparent incentives to buy new electric cars. This is all in the name of staving off deflationary pressure.

2. Office life rewired     

For the past ten weeks or so, our city centres have looked like the site of a neutron bomb strike. Every building standing, not a soul to be seen. We are now seeing more signs of life as we remember it but the well-worn routine of going to work will not just snap back into place.

I don’t think, as do some, that it means the end of the office but will affect how we use and value them. One anecdote that stuck with me is a consultant’s assessment that it would take two-and-a-half hours to get everyone into their office in one of The City’s banks under new social distancing regulations.

That’s the time it would take for people to be at their desks, never mind what you do about taking a coffee break or holding a meeting. It means completely re-engineering a routine we have taken entirely for granted.

3. Suburbia re-energised

Commuting, as we know it, is unlikely to be the same again. As rail companies have crammed extra seats into carriages to address demand, will they now take them out? Or will carriages eventually be smaller, self-isolated pods?

Coffee shops and cafes in outlying areas might be benefiting from the new routine. Many used to be becalmed during the day as workers flow inwards, perhaps buying a coffee on the way to the station. Now, a good number are delivering lunches and servicing those toiling from home who were normally miles away during the day.

Will we see an entirely different trend? A reversal from footfall-fed, bustling central restaurants to a revival for those suddenly finding customer volume is on the side of their street?

4. Tale of two pubs

Word reaches me from a Dorset village with two pubs. One shut down straight away and has remained closed. The other started delivering meals when it was allowed to do so and now sells more on Sundays than it did before lockdown.

Add this to my experience of local shops servicing demand by turning delivery driver, and it’s further evidence of the need to adapt. If our broadband coverage was similarly adaptable and available, those that could, would be able to work, contribute and transact more efficiently from across all corners of the country, not just its conurbations. Adaptability is key to survival.

5. Respiratory illness respite?

Social distancing and scrupulous hand hygiene have been strictly observed by most of us. Will this lead to a fall in the incidence of respiratory illness and, indeed, other types of infection if it does, as looks likely, become a new norm? Any studies on this will make interesting reading in the months ahead.

6. Driving to the sun

The expansion of, and access to, flying has been one of our most recent defining trends. As things stand, aviation is one of the most severely impacted industries. Even as airlines begin to repopulate their schedules, will it be enough to tempt passengers?

Social distancing through the airport, only to be seated in most aircraft in which this practice is all but impossible, is one of the many nettles to be grasped on your travels, perhaps, to a hotel offering access to its swimming pool with a shift system.

How many of us will decide this game’s not worth the candle and avoid both airports and hotels? Will driving vacations, villas and holiday lets benefit? That said, we’re already seeing discounted flight bookings are doing brisk business but can it be sustained?

7. University and first jobs

Disproportionately, the virus has affected older folk, who are more vulnerable to its impact, and younger people who will bear the brunt of a wounded economy. There’s now a big question mark over what the start of a new university year will look like. If it’s online, will there be mass deferral from would-be freshers? For those already studying, will they go back?

Technology has enabled the world to keep turning for most of us but so much of the university experience is just that: experience - living away from home, making new friends and plans. And that’s before you consider the damage to the sector itself. Will it prompt far more distance learning - an Open University 2.0?

Uncertainty everywhere means most companies have shrunk their recruitment, fewer vacancies for those newly graduated. And for those newly hired during this period, it’s conceivable that they’ve yet to meet their colleagues in person.

I don’t, for a minute, discount what elderly citizens are going through but you’d have to have a heart of stone not to feel for those just starting out.

8. Brexit post-lockdown

Deal or no Deal and does it matter? When negotiating with - and within - Europe, the loudest noise occurs just before the brinkmanship-driven deal or the problem is kicked down the road. If anyone has a better idea of where we will end up, please let me know. Whatever happens, the adaptable companies will be the ones to survive what could be a brutal double whammy of Darwinian capitalism.

9. Innovation for the decades ahead

As I’ve touched on many times before, we’ve always viewed innovation as an opportunity and a positive force. Last week, I wrote about a creative, entrepreneurial spirit that, even at times like these, lays the foundations for a brighter future. Energy and ambition will be remarkably undimmed and should be encouraged. This could be an inflection point for the way we save, shop and communicate.

10. And then?

As I pointed out from the beginning, no-one really knows what the world will look like after this. Or even when “after” is. All I can guarantee is that we will continue to look after our clients and do all we can to ensure we can all look ahead - and move forward - safely.

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After 40 years of experience in the pensions world, I'm sharing my insights.