Originally published on CBI
As we approach the end of what has been unquestionably been a dark year, we are finally seeing a glimmer of light at the end of the tunnel. But it will be some months yet before we will emerge from the darkness.
The rolling out of vaccines to the entire UK population will take time, and we won’t be truly safe until the whole world is vaccinated. While we wait, we will need to resist the temptation to abandon the restrictions which have protected us thus far. We have been warned that the “five days of Christmas” relaxation will almost certainly trigger another wave of infections; we must avoid further national lockdowns and deaths over the spring.
Then there’s Brexit
Of course, the pandemic has masked the reality of Brexit. Lest we forget, we actually entered the tunnel way back in 2016. We have spent the last four years trying to re-establish our relationship with the EU and with three weeks to go before the end of the Transition period, we still don’t know what that relationship will be. I suspect that there will be some eve of deadline agreement which will save face for both sides, but which won’t fundamentally change the no deal nature of the arrangement.
So the first quarter of 2021 is going to be hard for business. In the short term we will have to manage the continuing profound impact of social distancing restrictions on our operations, our staff, our supply chain, customers, and consumers. It’s likely to take a bit longer for most businesses to work through the implications of the reality of the UK’s withdrawal from the EU. But, fingers crossed, the pressure on business will begin to ease from the middle of the year. Because unlike previous recessions, this one did not come about because of a fundamental problem with our economy. This was no boom and bust; no failure of the global banking system. We shut down to save lives and ultimately to save the economy.
How will we pay for it?
That said, Rishi Sunak has given no real indication of how we are going to pay for the extraordinary measures he has put in place to protect jobs and the economy during the pandemic or the less publicised public funding to mitigate the worst impacts of Brexit. Normally, 10 months into the job, one would expect to know the Chancellor’s ideological views on debt and deficit. But he has thus far played his cards close to his chest. Will he be determined to reduce the debt and pay down the deficit in short order, going to the country with the public finances in better shape but with all the consequences of more years of austerity? Or will he take a Marshall Plan approach and be prepared to pay over a much longer term (the UK only made its final payment to the USA in 2006)? Or will he take, to coin a phrase, a third way?
Whichever path he chooses will have a major impact on business. And whatever way he goes, I would also expect businesses that took advantage of the government’s generosity during COVID-19 to come under greater scrutiny from central government, local MPs and councillors, trade unions, employees, local communities. I use the words advisedly: for many businesses, government support was the only thing that stopped them going under and that is exactly why the help was offered. But we also know of other businesses which took the money, continued to turn very healthy profits, pay good dividends to shareholders and bonuses to senior executives.
If I were advising one of those businesses, I would be suggesting that it repays whatever government support it received. It is just the right thing to do.
I have three other pieces of advice for businesses over the coming months:
- Continue to protect your business as much as you possibly can. Make use of government support if you really need it. Enforce social distancing, hand washing and the like in the workplace, and support as many staff as possible to work remotely. Encourage colleagues to get the vaccine when it is offered and remove any barriers you can to make it easy for them such as giving time off. I know some bigger employers are even exploring options for vaccinations to be given in workplaces. Collaborate with staff bodies and trade unions to encourage take up.
- Be a good corporate citizen. While everyone has been impacted by the virus, it has been worse for some, so act with empathy. Pay suppliers promptly, do what you can to help your local community, and treat your staff with respect.
- Review your public affairs plans. This is especially important if you have accepted any government support. If you do nothing else, engage with your local MPs and council. Make sure they know how you are faring and what you need now from them and in the future to survive and thrive. These people can be huge allies – local MPs like to champion local businesses. Of course I would recommend doing more than this – but it is a start.
Businesses which can manage these will be in a much better place to leverage the bounce when it finally comes.