Watch the webinar
Replacing the Daily Coronavirus Webinars, our new bi-weekly broadcast - CBI @10am - will help support you through the next phase of the pandemic, giving you expert insight and intelligence to continue adapting, and providing the guidance you need to restart and boost your business, and build resilience for the new normal.
In today's webinar, the first of our new series CBI @10am, we discussed how the country rebuilds itself after the crisis. To speak about this, we were joined by Dame Carolyn Fairbairn, Director-General of the CBI and Josh Hardie, Deputy Director-General of Policy and Campaigns also from the CBI.
These were the key points raised in the conversation:
- Building back confidence
- Winners and losers of the pandemic
- The vaccine question
- Trade deals: Brexit and beyond.
Building back confidence
As the summer holidays draw to a close, there is the sense that the economy is entering a new phase. "This is going to be an increasingly important time for schools, businesses, and transport systems as people are encouraged to return back to office working," Dame Carolyn Fairbairn, Director-General of the CBI said. "We need to be building confidence around people who want to go back to the office, feeling that they can go back."
Despite the talk of rising unemployment and coming redundancies in the autumn, "Rain Newton-Smith, our Chief Economist, has just come back this morning saying she's feeling more optimistic," Carolyn told the webinar. "We have seen a real bounce back, for example, in retail sales, which are now higher than they were this time last year and there is this sense of things reopening."
"We know that this is a major recession and we know it's hugely challenging but there are reasons to be cheerful that are coming through in the numbers."
Winners and losers of the pandemic
Over the summer it has become increasingly clear that the pandemic has had a differential effect on different parts of the economy. While the aviation and hospitality sectors are on their knees, the winners are winning big, causing a binary economy to emerge.
"Some of the losers are very big employers and so we are going to see unemployment rising. Our view at the CBI is that there needs to be more help from the government. We do not want a cliff edge to the furlough at the end of October and we are working now on what that successor scheme might be."
The furlough scheme ending could be particularly detrimental for areas caught up in a local lockdown. "That need for businesses in a local lockdown is very clear," Josh Hardie, Deputy Director-General of Policy and Campaigns at the CBI said. "We put forward a six point plan asking for real clarity on areas like transparency about trigger points, what would cause a region to go into lockdown and come out of it, so that businesses can plan a bit better."
As for the thriving sectors such as tech, autumn is going to be vital in terms of clever decision making by the Treasury. "We have a very flexible economy and a very flexible labour market in the UK," Carolyn said. "Let's create jobs in the really fast growing areas."
Looking towards longer term opportunities, Carolyn commented on what she hopes will be prioritised in the forthcoming spending review and the Chancellor's Budget: investment in the green economy, infrastructure and skills.
The vaccine question
As we enter the autumn, businesses are trying to make a judgement on what to expect about the timeline for a vaccine. Carolyn cautioned that "it is incredibly difficult, not just because we're not epidemiologists but because I don't think anybody really knows and you have conflicting views coming from scientists."
"I think it has been extraordinary the way scientists globally and particularly in Britain have come together. There are terrific partnerships going on between business and academia to make this happen but in terms of the businesses I'm speaking to, you can't count on it and that is the bottom line. Putting probabilities on it is a mug's game."
What is clear is that the government is becoming increasingly keen on the value of introducing a mass testing programme. "You at least want to back two horses and the other horse is mass testing. It is a fallback in the event that the vaccine is too slow or doesn't happen because that enables more normality."
Trade deals: Brexit and beyond
Picking up on the political theme, Carolyn commented "we have had sobering news coming from Brussels which is not altogether surprising. The October Council is going to be the absolute crunch time for these negotiations as our members are getting increasingly concerned about the no deal risk again."
In response to where the negotiations are up to, Josh told the webinar, "we're stuck on fish and state aid. Those are two big political issues but our gut feeling is that it would be quite surprising if the whole Brexit talks failed because of fish. There probably are ways through that will require political leadership and compromise."
"State aid is really quite difficult, there are genuine blocks there and we're doing all we can to try and find ways of parallel regulation and not supremacy by one side or the other. What it's going to need between now and the end of October is politicians to step in."
It is worth remembering that the government does want a deal, as does Europe. "Being blunt about it, a no deal is a huge political failure," Josh said. "Trade deals are tough and not being able to do a deal with your biggest trading partner isn't a brilliant start so as well as the economic argument, that need to get a deal to show that we can do deals is important."
The CBI has just launched their UK Transition Hub to provide as much information as possible and help members prepare for both a deal and no deal outcome.
As for a US trade deal, "it feels like good progress is being made so there is potential for one in 2021," Josh said. "Although there's a big election in the meantime, I'm not sure that will massively change the dynamic as this is a US-wide objective and so we're supportive and optimistic that there can be one. It will be easier if it can be done with clarity around our relationship with the EU."
"Another thing that is welcome is that they're going to revive a strategic trading advisory group," Carolyn added. This was a business group that involved business unions and consumer groups that fell by the wayside during lockdown but Liz Truss, Secretary of State for International Trade, has now committed to the group starting again. "That can really focus in on the US deal but also getting Japan and Australia over the line."