The great debate: economic recovery, freedom & well-being

28 July 2021

By Ken Rayner, Verbatim RSMR Model Portfolio Manager

Freedom Day has finally arrived, but what exactly does this mean for businesses and the general population? Almost all restrictions implemented in response to combatting the coronavirus pandemic have now been scrapped. After what must feel like an age for the owners, nightclubs can reopen and all businesses, in theory, will be able to operate pretty much as normal. For the first time in a year, face masks are no longer a legal requirement, but the government has emphasised that people should continue to wear masks as much as possible and certain institutions such as the London transport network are insisting that they must still be worn when people are using their services. 
The result of this confusing message, leaving people to make their own risk judgement, remains to be seen but it will no doubt cause societal chasms at the very least. A key factor in the government’s rationale for making the decision to unlock, despite the fact that infection rates could spiral out of control, is that they’re expecting hospital admissions to remain relatively low as a direct result of the vaccine roll-out. 
Earlier this year, non-essential retail saw the light of day, and hospitality venues were able to partially reopen. A recent release issued by the British Retail Consortium (BRC) stated that the unlocking of the economy following the winter lockdown has led to the fastest quarterly growth on record for shopping in store and online. The BRC deduced that bright skies, people taking holidays in the UK and the start of the Euro 2020 football tournament had all powered the spending trend. The restrictions in place did hamper capacity, opening hours and bar service, restricting full earning potential, but with the sizzling temperatures and England’s fantastic performance in the Euros, the hospitality industry has benefitted from a much-needed boost.
Idustries that have seriously suffered since the start of the pandemic will be hoping that the recovery not only continues but that it accelerates now that ‘freedom day’ has arrived and people are allowed to venture out in search of a more ‘normal’ experience. Hospitality and retail sectors should also get a lift by more people returning to office working and although it’s unlikely that working habits will ever return to pre-pandemic levels as flexible working is now very much ingrained in our daily lives, even marginal increases will provide a very welcome boost to the surrounding businesses.
How will customers respond to the new-found freedom alongside the surge in coronavirus cases? Lots of people will be looking forward to a big night out or shopping experience, but others will be more cautious, particularly if they feel more exposed with the changes in face covering rules. Could we even see a reverse in the spending trend as businesses that are popular with the older generation lose customers? There may be widespread reluctance in some generational cohorts due to fear that the world has become a more dangerous place. 
Despite reservations, it’s likely that business levels within these harder hit sectors will increase, but will venues have the staff to meet the rise in demand? The sector has already been struggling to fill some vacancies, partly as a result of staff from the EU returning home following Brexit, but also people switching to what they consider more secure industries following the collapse of the hospitality sector and the great uncertainties about its reopening! In addition, with the current regulations on contact and the NHS Test and Trace app, large numbers of staff are being sent home to isolate after being ‘pinged’. The problem is particularly acute in restaurants and pubs, with UK Hospitality boss Kate Nicholls saying that at some stages, up to one-third of staff have been forced to stay at home.
And what about the effect on other industries? As cases rise exponentially, the number of people being required to self-isolate will inevitably increase sharply, having a negative impact across lots of sectors. Nissan recently announced that production at its Sunderland car plant has been hampered as close to 900 workers (around 10% of the workforce) have been sent home to isolate after being ‘pinged’ by the app. There is also increasing evidence of widespread absenteeism due to workers claiming they have been ‘pinged’. Daily testing could replace isolation but until that option is adopted in the long-term, we’re likely to see the disruption to industry intensify. 
The decision to remove almost all restrictions is undoubtedly being driven by economics but there are other health aspects that need serious consideration such as rising mental health issues, a growing backlog for routine operations within the NHS and the negative effect on education. There’s also a growing realisation that coronavirus is here to stay and with a widespread vaccine program, the line of thinking is that we must try to move to some type of normality. Whether ‘freedom day’ was the right decision will be subject to intense scrutiny and debate in the near and distant future.
The government is being forced to make difficult decisions, few people would want to be in their place, and we can only hope that the population is sensible in their attitude to the easing of restrictions. Right now, our faith is in the vaccine; the link between cases and deaths has clearly been fractured but it isn’t entirely broken, and we’ll only understand the true impact of unlocking a few months down the line. As much as we’re all sick of hearing the phrase ‘new normal’, it’s a reality that we’re likely to have to get used to and it’s about making that reality as safe, as successful and as meaningful as it can possibly be.

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