There are fears of serious job losses and more difficult times in the second half of the year, which might be a story at several other places too, across the globe. But especially in the context of the United Kingdom, there are more interesting trends when you dig deeper.
For example, a recent article in
The Economist mentions that after ‘coronavirus’, ‘coronavirus fears’ are taking a heavy toll on Britain’s economy.
But how is ‘coronavirus’ different from ‘coronavirus fears’? The same article mentions that one of the primary reasons why the situation in the UK is far worse than Continental Europe is that despite largely similar infection rates, the people in the country are relatively slower to venture out than the rest of Europe.
As per an external survey quoted in this article, only one-third of British professionals had returned to their offices, compared with around three-quarters of those on the Continent. Simply put, compared with the residents of other European cities, London’s workers are more likely still to be working remotely.
An article on Economictimes.com has the headline “White collar India wants to work from home for the rest of 2020”. An extensive across-the-industries and across-organizations survey pointed out that only 30% of people are willing to return to offices. This implies as long as they can manage, people are not interested in resuming work from offices and are comfortable ‘working from home’.
In a way, this situation reminds me of a conversation that I had around April in which a senior fund manager from the US claimed especially in India and other developing countries, ‘lockdowns’ are ‘lockdowns’ only for people who can afford them.
What does all of this mean? If we compare the trends globally and if this conclusion is valid that ‘speed of revival’ depends on how ‘risk-taking’ people are, this most likely means a few things:-
- What you call ‘recklessness’ may be bad for people’s health, but that is very good for economic recovery. Lesser ‘risk averse’ the people are, the faster the recovery would be. If you go by the reports that several people in the USA are even against wearing a mask and get offended when reminded of the same. That may be bad for the ‘number of coronavirus infections’ but it also means that recovery will be much faster in the USA.
- The more disciplined people are and more they listen to authorities, the worse it is for recovery. For example, expect Japan to recover much later. In comparison, the more outgoing people are and more interested they are in ‘sports events’, the more helpful they could be in recovery. For example, this may be the case in many countries in the Continental Europe and may also be applicable for Australia.
- Many companies have actually reported that ‘work from home’ has actually led to increased productivity or at least ‘efficiency’ has not suffered much. That is bad for the broader recovery. If companies and other organizations have no incentive to get people back to their offices physically, ‘work from home’ will continue for longer and that is also bad for recovery. There are direct correlations with ‘gasoline consumption’ and how much coffee Starbucks can sell.
- Many tech giants such as Google have extended the ‘work from home’ till June next year and there are reports that some of them may even remain permanently in ‘work from home’ mode. That is not actually good for recovery.
- An additional danger (purely from a GDP growth point of view) is that the longer people remain in a changed ‘routine’ or ‘lifestyle’, the more likely that they may not return to the original ways. That will again be bad for recovery.
- The demographics could also play a big role. In general, the younger population is more likely to be more willing to travel and venture outside. Since they may indulge in more ‘high-risk behaviour’ typically, this should apply to their willingness to how quickly they can put the ‘Covid-19’ fears aside. This could help two of the most populous countries in the world, China and India.
Now when you look at these scenarios, it may not actually sound absurd that some of the countries in Europe actually want to pay people to go on vacations. It is a strange situation for policy makers.
On one hand, you want people to follow rules and regulations with utmost discipline and that requires them not to venture out unnecessarily and postpone any non-essential travel. On the other, you know that conquering the ‘coronavirus fears’ is an equally big challenge, almost as daunting as the challenge of conquering of ‘coronavirus’.