Hopefully, the Resolution Foundation is wrong but it recently estimated that gross domestic product (GDP) in 2020 will decline by more than 20% if the lockdown continues for more than six months.
Any longer and we could be back to levels of economic activity last seen around the turn of the century.
If that is the level of economic activity we experience at the beginning of 2021, what will the future hold?
Firstly, the beginning of 2021 will be nothing like 2001. Coronavirus will still be with us, but manageable with minimal disruption to daily life. Hopefully, a winter second-wave, and the experiences of the Spanish Flu second-wave, will both have been avoided.
All aspects of life will change. In lockdown, we are probably experiencing the biggest productivity gain for a long time with homeworking, video conferencing, etc having led to many acquiring new software skills. Those who have avoided technology because it was not a need, now embrace it because it is the only way they can communicate with their relatives.
For example, a firm of architects have served notice to terminate the lease on their London offices. It has been proved to them that the whole organisation, with the aid of technology, could operate efficiently without a Central London office. Similarly, Barclay’s chief executive has queried the need to accommodate several thousand employees in one London office.
But, while working with a laptop from the kitchen table is fine if the situation is temporary, what if you are a couple and the situation became permanent? Does this mean that if home working is adopted by many employers as the new normal in a post-coronavirus world, many of our homes will have to change?
If we are not commuting does that mean the need for childcare changes? We could rearrange our working day so that verbal interaction with others occurs when the children are at school. Other non-verbal work could be completed after the children have gone to bed. What childcare would be required? What would that do to TV schedules?
Having said that, how will schools and education adapt to the challenge of living with the virus? Will we see more older children studying from home supported by regular tutorials? Having gone through that how will we evolve from there into a post-viral world?
These are just a few thoughts resulting after letting my imagination run wild. How do you see the impact on our daily lives of our moving from lockdown to a world where we live alongside the virus?
As can be seen from my thoughts, there will be demand for new services and products, increased demand for some that currently exist; significant changes to others, and reduced or non-existent demand for services we will no longer require.
It will be from these changes a new economy will emerge and grow.
Getting back to business
So how will the changes affect your business? For those of us in financial services, our businesses are our customers. What services/products will they require? How will they want to interact? How will you deliver their needs?
The first reaction to the crisis was, how do we survive? As the crisis evolves, we have to adapt. We are seeing the evolution in day-to-day life. I know a restaurant owner and a publican. Both have developed into online food delivery services. Both privately confess they may not reopen as a pub or restaurant quickly, if at all.
What about in the later life market? The equity release sector has done exceptionally well here, introducing desktop valuations; and changing the way legal requirements are satisfied. What will be the future challenges and how will the industry react to them?
The final stage will be reinvention. This will be consumer-driven. I am seeing articles on the lines that if this is retirement, I don’t want it. The crisis has forced ‘retirement’ upon people who were not expecting it. Will more people consider what retirement will mean for them and how they will finance it? The economic consequences will also hit financial plans and I just don’t mean the investment effects on pension pots.
Go back to how the crisis may have already changed our lives. What will that mean for the employment market? How many well-paid jobs will become superfluous? How many new jobs will be created? Who has the necessary skills to successfully transfer to new roles? Gaps in employment and retraining will affect the retirement pot that emerges.
This crisis has definitely focused the spotlight on the care market. For how long will politicians be able to continue to kick the funding can down the road? More importantly, how will the public view later life care in the future?
I think we’ll move to two new normal situations. The first is how we adapt to living with the virus among us. The second will occur after the necessary vaccines are available and the virus is beaten and it’s tied up in how we enjoy our new freedom.
The journey through the various stages and how we evolve will influence all aspects of our lives.
With change comes opportunity; normal will never be the same, but the time to prepare for it is now.
Bob Champion is chairman of the Air Later Life Academy