Recorded 3 June, this webinar gives you your daily update on the Coronavirus pandemic and its impact on business. We also discussed the UK's recovery plan.
Watch the webinar
Overview:
The Covid-19 pandemic has seen consumer behaviours and attitudes shift dramatically. As we move towards recovery, how many of those changes will stick? And what does that mean for business, politics and the economy? To wrangle with these questions, we were joined by Ben Page, CEO of Ipsos Mori and Rain Newton-Smith, CBI Chief Economist.
Here’s a summary of five key points they discussed:
- Brexit is back and other updates
- Public confidence and the recovery
- What changes will stick?
- People want government to spend money
- Will the future be bright (and green)?
Brexit is back and other updates
For the last three months, businesses have been focussed on “survival” through the Covid-19 pandemic, said Rain. But with six months until the end of the transition period on December 31st, they will be watching the Brexit negotiations closely. Business will have to prepare themselves for the implications of new trading arrangements, or they could be looking at a no deal outcome.
To forge ahead with trade talks and to avoid no deal, both sets of negotiators will need to work together. “We absolutely want to see political leadership on both sides,” said Rain.
Other big items on the agenda this week are the job retention scheme (JRS) and the 14-day quarantine measures.
On the JRS, options for greater flexibility and partial furlough will begin from July. Rain explained that this flexibility will be important as manufacturing lines and shops restart. The option to furlough staff part time will give companies space to understand “what demand is going to be like.”
Questions remain about the rules governing the 14-day quarantine for travellers to the UK. There are some exemptions for essential workers with specialist technical skills who are needed for emergency or essential works. But businesses do not know yet which authorities will be making the decision about whether workers will be allowed in, said Rain. To ease the process at borders, there have been suggestions about introducing a system of pre-approval, alongside ideas to establish air bridges between countries that mutually consider one another safe for travel.
Public confidence and the recovery
The UK public “drunk the Kool-Aid” on the government’s original message of “Stay home, save lives,” said Ben Page, CEO of Ipsos Mori. More people obeyed the lockdown restrictions than many behavioural scientists expected. However, as we move in to the next stage of the outbreak, there needs to be a “more nuanced view of risk.” This is something that the UK’s population is struggling with. “The public is extremely anxious now,” explained Ben.
“The public have difficulty with understanding risks that are difficult to quantify,” he said. There is great uncertainty about the risk of going out in public now; the majority of people think that the government is releasing lockdown measures too soon. To tell people that they are overestimating the risk is “a difficult message for government, who aren’t trusted anyway,” particularly in light of the Dominic Cummings scandal.
This lack of confidence will prove challenging as we move towards reopening the economy. Ipsos operates internationally and Ben explained that the UK can look to other countries to see what has happened there. For two reasons, consumers aren’t going out and spending:
- Because of fear about the virus
- Because of the economic shock
People are concerned about the security of their jobs and about the possibility of a recession or even a depression. More people are saving money and paying off debts.
What changes will stick?
Trends that we have already seen pre-Covid are “likely to be accelerated,” said Ben. Digital adoption is a big trend that has picked up pace during the crisis. More people are shopping online and banking online, some for the first time. It seems unlikely that people will go back into back branches now they know they can do what they want over the internet.
With more opportunities for home working, people are considering moving outside of London and other big cities. If they only have to travel to the office a few days a week, living in rural areas seems more feasible, explained Ben. Although he said not to expect a “hollowing out” of the capital.
An increased interest in “simple domestic pleasures” – home improvement, dining in, gardening – looks set to continue for some time as people “won’t feel quite safe going out,” said Ben. It could be “up to a year” before people feel comfortable again.
People want government to spend money
One big political trend we were seeing before the pandemic was a desire across the political spectrum for the government to spend money. “The public is up for government stimulus and government spending of all sorts,” said Ben.
But what exactly will they be spending it on? We are anticipating a Budget in July. Ben mentioned the NHS and social care as two big areas for funding as well as government stimulus packages for digital infrastructure, green energy and housing.
Rain thinks that these three key areas will be of focus in a forthcoming Budget:
- Support for the labour market: How can we do better at matching skills to jobs available within local areas? Can we join up further education colleges and local businesses to make it easier to find jobs? Can we support employers to bring people who have lost their jobs back into the labour market?
- Infrastructure spending: Getting on with the projects already promised and speeding up others. Can we “supercharge” our digital broadband capability?
- Low carbon technology: Can the government finance electric cars, low carbon transport and heating for homes? With COP26 coming to the UK, can the country lead the way as green tech innovators?
Will the future be bright (and green)?
After the financial crisis in 2008, the environmental agenda went on the backfoot as governments around the world focussed on economic growth. The attitude was “build anything, do anything,” said Ben. This led to a “massive surge” in carbon emissions.
Ben had been hopeful that 2020 would be the year that “climate change broke through.” Last year more people searched for Great Thunberg than for Beyonce, he explained. But concern for the environment seems to have “collapsed” with delays on initiatives such as the plastic straw ban.
The British public is generally keen to do something about the environment, explained Ben, but that doesn’t mean they are optimistic about the future. One of the attitudes that has “defined Britain” over the last few years has been the idea of the “loss of the future.” Around 35% of people expect their children to be worse off than them. Rising youth unemployment after the Covid crisis may exacerbate this trend.
Rain rounded off the discussion on a more optimistic note, saying that we can think about a move to a greener economy in a “jobs rich” way that builds up the skills of young people so they can take advantage of opportunities in greener technology.
Key questions we answered:
- Rain, what is the CBI’s thinking on a possible national recovery plan?
- Health will remain the priority for the foreseeable future, as the UK adapts to the ‘new normal’ of living with the virus. But this shouldn’t stop us working together as a country to secure our ambition of building back better.
- The national goal must be to develop a dynamic, market-driven plan that focuses relentlessly on growth – backed by collaboration across business, the government, and unions.
- There are four broad principles to this:
- Build from confidence
- Make the UK the best place to live and work
- Unleash the power of coordinated devolution
- The recovery must be built on the shoulders of enterprise
- In the labour market, we not only have a skills mismatch, but we now have the challenge of not having enough jobs. It’s important to keep people engaged, as it’ll be hugely damaging if many are out of the labour market for six+ months.
- We’ve got a big opportunity to make real progress towards our net zero target.
- With digital adoption hitting new heights, this is a perfect moment to accelerate fibre and 5G.
- Finally, we must stabilise the UK’s R&D by supporting a restart of paused innovation and stepping in to help the university sector.
- Ben, where is public opinion and consumer sentiment at the moment?
- We’ve been tracking public attitudes to Covid-19 since early February, both in the UK and around the world.
- In Britain, we really bought into the message of ‘stay at home and save lives’. The public were extremely anxious, so that message was very effective – with 90% of the public saying they understood the government's original message.
- When we ask the public if we should open the economy without a vaccine, the response has always been to put public health and public safety first. Indeed, the majority of the public say that the government is coming out of lockdown too quickly.
- The public is looking for guarantees of safety, but Covid-19 is a bit like the MMR vaccine, where experts are telling you that you can do things and it's probably safe – but they can’t guarantee it.
- Many people think that if they catch the disease, they will be hospitalised. People think that about 40% of those who get Covid-19 end up in hospital. But as I understand it, the figure I've seen most recently is only 4%. So we we're massively overestimating the risk.
- Today, only 56% of people say that government communications are clear.
- The public is very keen for government stimulus and government spending. Rishi Sunak has discovered a ‘money tree’ of sorts and shown you can ‘feed it steroids’. And a lot of people are quite positive about that.
- Ben, what is the data telling you about demographic and geographic differences in public attitudes?
- The young are in some ways the most scarred by this because they have taken some of the brunt in those sectors that have been most affected. There are also people with young children looking after kids at home.
- London is becoming a bit more relaxed, for example, about using public transport compared to the rest of the country.
- There’s also a lot of difference in attitudes based on one’s politics. If you're a Labour voter, and you’re assessing the government, everything's a disaster. If you're a Conservative voter, you're far more sympathetic. And so, some of that plays into London being a bit more critical because it's a much more Labour city than other parts of Britain.
- I think what's interesting is that despite that, everybody of all age groups wants to prioritise public health and safety.
- Ben, can you give us an overview of consumer spending sentiment?
- It is difficult to give an accurate picture of what people will do around consumer spending, particularly over a six-month period.
- But there has been a digital acceleration. And there is no reason to believe that people will go back to their old ways.
- We've had a lot of people who have noticed that perhaps they don’t need to live in London – particularly if they’re only going to go into the office twice a week. They could live further away, save money and work more remotely.
- I think people won’t feel safe going out straight away. It will feel a bit weird going to restaurants for some time. In addition, people are worried about their incomes, and so you'll see more home baking, DIY, etc. This is what we saw after 2008.
- Ben, can you talk about public opinion on politics and our political leaders?
- We know that crises in democracies lead to a rise in trust and confidence in governments. We saw that in the Falklands War, and we saw it after 9/11 in both the UK and the US. We’re now seen across Europe due to Covid-19.
- Donald Trump has, by and large, managed not to gain the population’s trust. But, virtually everywhere else we saw a surge in satisfaction with and indeed trust in government. I think it’s sort of a wartime thing – that we're all in it together.
- The government has interfered in our lives more than ever. We want to believe and know that they're doing the right thing. Support for the government's surged and indeed, the Conservative Party went up in the polls. Now, with mistakes having been made, we’re seeing a gradual return to politics as normal.