It is always easier to say what one would have done differently with the benefit of hindsight. But as the UK continues to emerge from lockdown, it is imperative that we take a step back – without playing the blame game – and ensure we learn the economic, social, and political lessons of Covid-19, lest we move on so quickly that once again we leave ourselves open to future pandemics with potentially even more disastrous consequences.
The number one economic lesson from the experiences of the last six months must be that we need to better prepare. Never again should we find ourselves in a position where the only option appears to be to shut down our economy just to survive, without a plan to re-open it.
On 4 May, the Office for Budget Responsibility predicted that the economic impact of the three-month lockdown imposed in response to the coronavirus pandemic, would include: a fall in GDP of nearly 13%; a rise in unemployment to 10%, falling to just over 7% by the end of 2020; and the largest deficit since the Second World War.
If a three month lockdown could produce this sort of economic catastrophe, then surely our number one lesson has to be to ensure that another approach is available to us in future pandemics. Plans should be developed, road-tested, and so clearly communicated that they become part of the national psyche.
To achieve this there are three key steps we need to take:
1) We need an effective test and trace system, to be able to track any disease so that the response can be appropriately targeted and we do not need to shut down everywhere.
2) We need to put a ring of steel around our most vulnerable and focus our health response efforts on their protection. And we need a world-class NHS of sufficient scale that it does not need a lock down strategy to protect it, but is fully equipped to care for those in need of the greatest support.
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3) Then, if we want to reduce infections spreading through unnecessary community contact, we can say to people: if you are able to work from home and drive your businesses productivity then do so, but go into work if you can’t, with cafes, restaurants and shops ready to adapt quickly to takeaway and delivery as a natural part of their business continuity planning.
Stopping economic activity should not be our only lever, or our lever of first resort. Livelihoods are at stake, and we should not tear down in a matter of months what has taken people years to build.
The second lesson we need to learn is to plan for economic resilience during a public health crisis. It is instructive to look at the example of Switzerland, where the planning for economic resilience is devolved across the entire business community and lodged with 250 supply-line managers in firms that are judged to be strategically important for any aspect of national security, such as food or PPE.
Those 250 people are the national planning process for resilience. They are required to stock three months’ worth of anything they judge may jeopardise their ability to continue production and maintain supply in the event of a crisis. Being given a role of public responsibility can create a strong sense of pride that causes people to go above and beyond, and there are many British businesses that would welcome the opportunity to be part of a similar national response strategy for the UK.
The third lesson we need to learn is how damaging and contagious fear is during a global pandemic, and the importance of clear communication. It was Athenian historian Thucydides who wrote during the outbreak of the plague in 430BC that “the catastrophe was so overwhelming that men, not knowing what would happen to them next, became indifferent to every rule of religion or law”. In future, our response to events should not feed people a diet of fear, but rather recognise that the British public have high levels of personal responsibility. Many individuals and organisations recognised the risks and took steps to protect themselves and others even before the coronavirus lockdown officially came into force.
Strategies for future response should also cover the preparation and dissemination of a huge volume of factual information to counter the likely tsunami of disinformation and propaganda that we can expect in the event of any future emergency. Research has shown that the fear factor from a biosecurity threat is 10 times more than a conventional threat. From a strategic perspective we can see that there has been an increase in these sorts of pandemics, and we should focus our attention on developing a full counter-terrorism biosecurity strategy given the potential for massive psychological impacts on citizens.
These are three of the lessons we should be learning from the coronavirus pandemic, but the more immediate question is, how do we pick up the pieces and move forward to generate sustainable economic growth that benefits everyone?
First, we need to focus on a skills-based recovery to stimulate employment growth. From schools that prepare students for the world of work, to the training and development opportunities that help people progress in their careers, we need to look at how individuals can not only become and remain employed but thrive in their work and reach their full potential. This will require us to harness this moment of transition to help people (re)train with the skills that will be needed in the future – in a world of artificial intelligence and new digital technologies. People need to be fully prepared and equipped for what is to come, rather than (re)trained for jobs that are likely to disappear again in the next decade.
Secondly, while we can’t throw out the fiscal rulebook, we need a growth-based recovery. We cannot spend our way out of the current economic situation. Ultimately, we will need to grow our way out of it, and that means unleashing the talent and creativity of the British people. We should be on the side of the business leader who wants to expand and the entrepreneur who wants to take on her next employee, and we need to provide a clear signal that if you invest in building a business, never again will we shut it down and prevent you from continuing to work. This is an issue of trust.
In addition, the focus now needs to return to the government’s levelling up agenda to ensure that all regions of the UK – but particularly the north of England – benefit from the recovery efforts. Before the coronavirus hit, the government had pledged to tackle decades of regional inequality by investing heavily in infrastructure, science, and skills training outside London and the South East, including a dedicated £4.2bn fund for urban transport and a £3bn national skills fund. Now is the time to make that pledge a reality.
Thirdly, we need to liberate free trade with our democratic partners. This is a moment of challenge, but also one of significant opportunity. A short-term objective should be to sign a trade agreement with the US, and a longer-term goal will be to join the Trans-Pacific Partnership to enable increased trade with countries such as Australia, New Zealand, Chile, Singapore, and Japan – the world’s third largest economy. Building on this, we also need to transition away from a relationship of aid reliance with those African nations – such as Rwanda – that are ready for such a change and want a trade-oriented relationship with the UK instead.
As we learn the economic lessons of Covid-19 and start to build a path to future success, we must recognise that by focusing on prosperity creation rather than just poverty alleviation, we can change the landscape for all those struggling across the UK.
If we can build a recovery on our entrepreneurial spirit, we have the opportunity to continue to be a leader in the global market and drive increased prosperity both at home and around the world.
Baroness Philippa Stroud is CEO of the Legatum Institute.