Across the world businesses and individuals are rising from the shattered remnants of the "old" normal and trying to find a way to make sense of the "new" normal they are facing. The Prime Minister, Boris Johnson, has just veiled his plan, allegedly modelled on Franklin D. Roosevelt's plan following the Depression in 1933, promising a programme of spending across Britain with the objective of preventing job losses.
The £5 billion spending programme has received a relatively lukewarm reception, with Carolyn Fairbairn, the director-general of the Confederation of British Industry (CBI), commenting "the prime minister's speech could build the foundations for recovery" further remarking "foundations are there to be built on. More is needed to prevent the uneven scarring unemployment leaves on communities." Frances O'Grady, the general secretary of the Trade Union Congress (TUC) went further saying "more was required; today we face the biggest economic crisis in a generation. Without big, fast action, millions face the misery of unemployment. Today's announcements from the prime minister fall far short of what is needed."
The Prime Minister will do well if he can replicate the level of job creation achieved by Mr. Roosevelt by the extensive restructuring of the US infrastructure across the country when he executed the original plan. Nick McEwen, an associate in Giambrone's corporate and commercial team pointed out "a number of well-known businesses across the board have announced a level of job cuts that has not been seen for years. £5 billion is a substantial sum by any standards; it is highly likely that more money will be needed to head-off the potential job losses predicted in the front line industry sectors such as hospitality and the airline industry." In retail alone hundreds of jobs will be lost with Harrods considering 700 job losses, John Lewis likely to close some departmental stores with an unknown number of redundancies, 500 office jobs lost at Topshop and 600 staff to go at T.M. Lewin. Upper Crust is flagging up job losses in the region of 5,000. Nick McEwen further commented "the furlough scheme is winding down and businesses will have to once again assume the costs of their staff. The government may bow to pressure to extend the scheme in an attempt to save jobs but clearly the scheme will be brought to a close within a month or two."
There is one encouraging voice from the Bank of England's chief economist, Andy Haldane, who said that He was concentrating on real-time indicators that showed the recovery was significantly faster than the Bank of England (BoE) had expected in its most recent forecast from May
As the lockdown grip is finally being cautiously eased business owners will need to formulate survival strategies in the short term and be prepared to be agile whilst the coronavirus crisis still hangs over the world. The survivors will recognise their customers' changing needs and make sure that they can match the requirements. A number of organisations have swiftly adapted their business model to encroach into areas associated with their core business; also as part of an evolving perspective, employees may have to undertake responsibilities and tasks that would not normally be part of their role. The government has taken measures to prevent hostile take-overs of vulnerable companies by acquisitive foreign organisations. However, it is worth considering the potential to strengthen a business with a bolt-on or merger to enable the business to withstand the many challenges of the current climate.
Whilst the Prime Minister's spending plan is considerably less ambitious than the American model he is following, it is to be hoped that it will go some way to improving the country and encouraging enterprise. Boris Johnson may very well intend to increase the spend in stages to get businesses going again.
Originally published 02 July, 2020
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