Established Since 1991
9 Jul 2020
East Midlands Chamber Quarterly Economic Survey – Q2

 

Chamber Commentary

The speed at which the economy shut down because of the UK’s – and the global – response to the coronavirus pandemic was unprecedented. Whole swathes of the business community either ceased or dramatically reduced activity, with some yet to get back underway.

While there are some sectors and businesses that have seen growth in the past few months – for example, some food manufacturing or IT support and provision – for the majority of businesses this period has been one of uncertainty and waiting for further signs as to how and when the economy may unlock and any further health implications of this.

It has also been a period that has challenged lots of businesses to look closer at how they operate. While for some the switch to remote working could, for practical reasons, be only partial, other organisations have been able to successfully embrace a new way of working.

For those that have needed to go back into the workplace, social distancing requirements have resulted in some being forced to seek further efficiencies in how they work. At the same time, other businesses have successfully shifted wholly or partially to an online service as a means of continuing activity during the lockdown.

The extent to which lessons learned from this period will be carried forward as the economy recovers will, in part, depend on customer expectations and behaviours, as well as businesses conducting their own cost-benefit analysis of areas such as fixed costs and overheads, not to mention employee wellbeing and safety. Taken together it would not be a surprise if one longer-term result of the pandemic is a growth in business productivity, a nut that many Governments over a long period have looked to crack.

In addition to looking at operating models, many businesses are looking again at their supply-chains and customer bases.

Some have been spurred to look at more local suppliers – something that might also support resilience in the face of any further Brexit disruption – and others are looking to diversify their customer bases and markets. For example, the upfront costs of developing new overseas markets have arguably been reduced through the embracing of virtual meetings using the various platforms that everyone has become accustomed to in recent times.

There are undoubtedly some long-developing trends that have been sped-up by the pandemic and things will likely not return to exactly as they were before – such as the growing importance of digital and online in retail and the positive impact of a growing low-carbon economy in the East Midlands. There has also been significant disruption to some sectors where the model is not fundamentally broken and with the right support, businesses will recover – for example, large parts of the travel and tourism industry.

There is still a way to go before the economy can fully recover, and there will be many hard stories at both an organisational and individual level over the summer and beyond.

Regardless of a business’s individual experience of the past three months, in conversation with members, many see opportunities to grow and succeed outside of this current period, perhaps taking a different approach to how they do this. To help them in this, continuing to support businesses to innovate, diversify, and think differently must become a central tenet of the Government’s policy response as we come out of the pandemic.

 

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