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May 2020

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You know the times are strange when you have an entirely serious conversation with someone about whether the future is going to shaped like a U, or a V, or much more likely, a ’ lazy swoosh’ (think of a tick, and then push the long line down a bit; in fact, quite a bit.) 

If you are in the ‘V’ camp, then you think that Jersey’s economy will decline sharply during lockdown (that’s the easy bit) but return just as sharply once restrictions are lifted. In other words, you go around telling everyone (like your shareholders) not to worry, give it a few weeks, and we’ll all be back to ’normal!’ Well, I hope you are right, but the weight of history, common sense and logic really isn’t on your side. Good luck, you’re going to need it. 

Which brings us to ‘U’. Sorry, that’s not a cheesy segue (er, actually it is) but the second group in our intrepid band of armchair economists; those who think that the economic recovery will happen, but it will be more sluggish, and will follow a period of stagnation before struggling back to some growth. Well, possibly. It’s more in line with what tends to happen after a pandemic - but, this one has been global, it is cutting deep, and it is changing everything. We are looking at the rest of the year with some form of travel & physical distancing restrictions, with all of the implications that will bring to those businesses who need to have people close together in order to generate sufficient revenue. You can’t incur 100% overheads from re-opening a cafe if you are restricted to 50% of revenue by only being allowed to serve half your customers; to put it another way, for health reasons, you are specifically prevented by the state from being ‘busy’ (ignoring what the market wants) but your operating costs haven’t changed. 

And so to the lazy swoosh. I’m sure the economists have a better term for it, but as someone who regularly looks at a pair of branded trainers, and then decides that a cup of tea and a biscuit is probably more sensible, ‘lazy swoosh’ seems to have a bit of resonance. Put simply, it means the recovery is going to be slow and drawn out. The pandemic will go on, in fits and starts, acting like an acid, corroding confidence, as it oozes through society. The government will keep businesses afloat with some cash, but then also need to stimulate the economy with some major fiscal stimulus projects - like a new hospital. Just putting it out there - it does seem apt. 

But in the background, the pandemic is changing the way we think, and the way we work, and the businesses who will succeed and drive the recovery will be the ones who are already seeing the opportunities and innovating. Could it be the end of cash transactions, for example? What will be the effect on the commercial property market once businesses make a success of home working? What sort of travel industry will be around by Christmas? Could the finance/legal/regulatory sectors get a big boost from a global ‘flight to quality’? If physical retail was kneeling, punch-drunk on the canvas, PreP (pre-pandemic), it’s hardly going to be bobbing and weaving, flicking out the jabs, PoP (post-pandemic).

Fascinating. One major plus we can take from the pandemic so far, is the end (for now) of frontline workers being taken for granted. That’s why we have given over our front cover this month to a montage of faces, each one of them someone who has taken the risk of going out to work, just because that’s what they do. 

We will all need strength to overcome the weeks of ‘fear messages’ we have heard through the first phase of the pandemic, and play our part in the next phase of (safely) getting the economy working again. We need look no further for inspiration, than the calm courage those frontline workers have shown from the start. 

Enjoy Connect.

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