The post-coronavirus economy: how the pandemic and lockdown could shape a new commercial world

Analysis: There’s talk of a profound long-term economic reordering in the wake of this crisis. Ben Chu looks at how things might unfold

Covid-19 will catalyse some huge changes, predict analysts (Getty)

Our economy has already been profoundly affected by the Covid-19 pandemic. We are almost certainly suffering one of the steepest recessions in UK history as a result of the unprecedented lockdown imposed to stop the spread of the disease. Yet this may be only the beginning.

There’s talk of a much more profound long-term economic reordering – major shifts in the way we work, in how businesses operate and how we trade with the rest of the world.

Of course it’s impossible to say with any confidence how the UK economy will change as a result of this pandemic. But here The Independent examines some of the ways the future might unfold.

Working from home for good?

The new normal? (Getty)

Working from home has become common during lockdown, and some analysts suspect many of us might never go back to the office.

Why? Because the lockdown will have been a proof of concept that mass home working can work. Employees and employers alike will be more comfortable and familiar with the arrangement. Further, financially pressurised companies might see home working as a way of reducing some high fixed overhead costs in the form of office rents.

New social-distancing requirements in the workplace might also provide a nudge for managers to continue with home working.

The boss of BP, Bernard Looney, thinks that the growth of remote working will be so strong that it will slash the need for travel to work and thus radically affect the global oil price. “Could it be peak oil? Possibly. I would not write that off,” he says.

A new commute?

Less of this? (Getty)

The government’s lockdown-easing strategy encourages people returning to work to avoid public transport where possible.

But that change could be more enduring, some believe. A poll for transport consultants Systra last month found that a fifth of people in the UK think they will decrease their use of public transport after the pandemic compared with before travel restrictions were imposed.

Of those people, half had concerns over getting ill, while a quarter said they would work from home more and a sixth said they would find another way to make their journey.

This might suggest more driving. But Lord O’Donnell, the former top civil servant, thinks there may be a long-term demand for car-free days from people who appreciate the lower pollution levels resulting from the lockdown.

“We’ve suddenly had a natural experiment. People might have said, ‘What if there were no cars?’ Now that people have seen this and that’s influenced their behaviour and possibly the way they think,” he says. “Maybe this is a chance to start thinking about more radical behaviour change.”

An entirely online market place?

The tech firm is hiring 100,000 extra workers in the US (AFP/Getty) (AFP via Getty Images)

The UK high street was already deep in crisis before coronavirus struck thanks, in part, to the explosion of online retail.

Online sales had already reached a fifth of all retail sales at the end of last year, according to the Office for National Statistics.

Some think that this lockdown – when demand for online delivery has exploded – will accelerate that process further.

“As the UK slowly returns to whatever the ‘new normal’ is, consumers won’t be quick to forget their old buying habits which they acquired under lockdown,” predicts one consultancy.

The implications of that are fewer workers in shops and department stores and many more people employed in distribution centres and delivery roles.

The moves by Amazon, the biggest online retailer, to hire an extra 100,000 US workers during the lockdown indicates which way the hurricane is blowing for the world of retail.

Feet on the ground?

Some believe we have reached ‘peak plane’? (Getty/iStock) (Getty Images/iStockphoto)

Lockdowns and travel bans have wiped out aviation business travel. And some think this could change business travel behaviour in the long term.

“This is very likely to make everyone more aware of when it really would have been better to go in person and when it is much quicker, easier and cheaper to make a conference call,” argues the philosopher Julian Baggini.

“The very fact that people will have been intensively using stay-at-home tools like Zoom for weeks will normalise them. Even if most business trips resume, as long as a sizeable proportion do not, we’ll see a drop in business travel.”

Due to passenger health concerns, most aviation industry groups are not expecting a swift bounce back of demand for flying when lockdowns are eased. New regulatory demands such as requirements for social distancing on planes could also hamper the industry.

The Airbus chief executive, Guillaume Faury, warned last month that it could take “three to five years” for passengers to be as willing to fly as before the crisis. Some even think 2019 will turn out to have been the year of “peak plane”.

De-globalisation?

Goods could be produced closer to home (AFP/Getty) (AFP via Getty Images)

The past 40 years have been the era of globalisation, particularly for goods. Western companies have shifted their factories offshore to benefit from cheaper labour costs overseas. They have increasingly sourced their industrial inputs from abroad too as tariffs and other trade barriers have fallen.

Some think the shock of coronavirus, with difficulties sourcing personal protective equipment and ventilators from suppliers abroad and anxiety about the potential hold-ups in medicines manufactured in other countries, could usher in an era of de-globalisation, at least for physical goods.

“Even if they have to pay more, firms will produce closer to home, whether because of their heightened recognition of the risks of relying on far-flung operations or in response to political arguments for achieving national self-sufficiency in the provision of essential goods,” predicts the economist Barry Eichengreen of the University of California, Berkeley.

De-globalisation may help create some new jobs in countries like the UK due to manufacturing reshoring. But it will also likely mean higher prices, meaning lower inflation-adjusted wages for people, at least in the near term.

However, some think de-globalisation could also spur more corporate investment – and breakthroughs – in potentially revolutionary new labour-saving technologies such as 3D printing and artificial intelligence. That’s something that could profoundly change the way we both live as well as work.

“This crisis will catalyse some huge changes,” says Mohit Joshi of the Indian multinational IT firm Infosys. “Few industries will avoid being either reformed, restructured or removed.”