Mike Palin is a successful deliverer of economic growth strategies as well as being a leading thinker on how economic growth implementation can fit with broader policy initiatives. His focus is on implementation of strategies to deliver results.
On April 14th the Office of Budget Responsibility (OBR) issued it’s ‘reference scenario’ for how the Coronavirus will impact on the UK economy.
If you didn’t pick up the headlines, and don’t think you need to be planning for what will happen next, these numbers might change your mind:
- The OBR are forecasting that UK GDP will drop in Q2 2020 by a staggering 35% - the largest single 1/4ly drop in GDP during the 2008/09 financial crisis was 2.2%
- The OBR estimate is that the overall drop in GDP in 2020 will be 13% - the cumulative drop in GDP in 2008/09 was 6.6%
- According to the OBR, 2.1 million will become unemployed in the next three months on top of the 1.4 million already unemployed taking overall unemployment to 10% - unemployment in 2008/09 jumped to 8% in January 2009 before peaking, with a lagged effect, at 8.5% towards the back-end of 2011
In short, the immediate impact is much worse than experienced just over a decade ago and remember that the OBR scenario assumes just a short three-month lockdown and that the economy will bounce back straight away – there is absolutely no guarantee that that will occur and hence the reality could be much worse.
At GC Consulting we have been monitoring the various forecasts as they have been published to try and understand the likely impact on people, places and organisations. More importantly however, we have also been considering what it is that with drive the likely impacts to try and understand, from a delivery perspective, what it is that might be done to mitigate and recover from the negative effect.
So what can you do?
The first thing to do is to try and understand exactly what may play out over the weeks and months ahead and consider what that means for your organisation, your partnerships, and your place.
Although there is no absolute position on what is likely to occur there are a relatively limited number of high-level scenarios and consequent policy responses. Hence, you can start to assess implications now, and plan for what they might mean as any given scenario unfolds.
Our CV-19 scenario planning tool allows organisations and places to consider what the impact may be under each of the likely scenarios, and then allows you to begin to form action plans in response.
This is not an off-the-shelf ‘plan’ but a means by which you can develop what is right for your organisation or your place, based on your own informed view of how CV-19 will have an impact.
The second thing to do, and informed by the first stage, is to plan for what needs to be done when the Government emergency financial and economic measures are scaled back – what will you do?
The Government has introduced a number of measures that are designed to mitigate the negative impact on the economy from the introduction of social-distancing and lock-down measures. This includes grants to businesses, the furloughing of staff, and access to additional loans. Yet these are necessarily temporary measures which Government must withdraw from and that point could be relatively soon.
When they are withdrawn, we can expect a sudden increase in business failure, and job losses as a result.
Our view at GC Consulting is that there is absolutely no-time to waste in planning for the end of these emergency measures as the localised consequences could be substantial. While planning for recovery may be important (see below), mitigating the loss of economic activity and jobs when these measures end is as important, and a far more immediate, a task.
This may mean re-scoping services to support businesses, to support the unemployed, a new focus on retraining efforts, and even additional mental health support – but knowing when it may occur and how damaging it might be will greatly help mitigate the worst effect.
The third thing to do is to start planning for recovery in a well thought out and practical way that truly recognises the true severity of a recessions likely effect. What is it that will most benefit those who need help and how can we most quickly ensure that our economy, and our communities, ‘bounce-back’?
Many organisations and places may already have strategies and plans in place – such as Local Industrial Strategies or plans for how a forthcoming Shared Prosperity Fund might be used. Yet those would have been based on a world view that did not include Covid-19 (well done to anyone who did include a global pandemic scenario in their thinking by the way!).
If you acknowledge we are facing the deepest recessionary impact ever, and think your plans can be ‘tweaked’ in response, then you’re massively underestimating the scale of the task ahead.
How we can help…
To aid organisations, and places, to better understand these drivers and what the implications may be we have developed a CV-19 scenario planning tool where we work with you to understand how the months ahead may play out. Our purpose is to allow you to get ahead of issues before they hit and to maximise your ability to both mitigate the negative effect, but also, to plan for what comes next.
For more information on our tool and how it could help your planning in the months ahead, contact us.