Economy will suffer ‘deep rooted’ pain from coronavirus measures, warns Brighton academic

Posted On 29 Jun 2020 at 2:01 pm

A significant number of jobs and businesses are at risk in the aftermath of the covid-19 coronavirus lockdown, a Brighton University academic has warned.

And the risk looks to be pronounced in shopping and hospitality – two of the mainstays of the local economy in Brighton and Hove.

Finance expert Rob Hayward, a former bank economist, said that there might be an initial bounce in spending in the short term.

This could happen when businesses such as pubs, cinemas and hairdressers are allowed to reopen from Saturday (4 July).

But Dr Hayward, a course leader and senior lecturer at the Brighton Business School, expects the effects of social distancing rules to mean that the road to economic recovery will be bumpy.

He told a Brighton University podcast that much damage had already been done and many businesses would continue to struggle.

Dr Hayward, course leader for finance students studying for a Master of Science degree, said: “Shops have been quite innovative in the way that they’ve responded to the crisis.

“In most cases, shops are dealing with quite low profit margins and so they haven’t got much scope to last for a number of months without getting any revenue from shopping.

“They have fixed costs in many cases, although some of those might have been deferred. Certainly, the taxes have, but they always have some expenditure.

“So, I think the longer it goes on, the more retail and hospitality establishments will go bankrupt.

“And so, the quicker the government can get things moving again, the more likely it is we can save some of these small businesses.”

Dr Hayward also said: “It’s is a bit unclear how rapid the emergence from the lockdown will be but I think there’s a risk that it’s going to be quite painful over the next six months and that the end of the furlough scheme will mean that businesses will start to lay people off.

“The fact that we have more people becoming unemployed will be a bit of a shock.

Rob Hayward

“It’s not, I don’t think, going to be a smooth bounce back to where we were before. It’s going to take a long time to get there, if we ever do.

“It’s probably going to be quite a painful adjustment process to move the economy back to even the level of output and employment which we had back in January and February.”

But it’s not all doom and gloom, according to Dr Hayward, who believes that the pandemic is an opportunity to work on “green” projects help the economy become carbon neutral.

He said: “If the government borrows money and embarks on these projects, building infrastructure, which is going to help the economy, building green energy resources, introducing public transport which is better for the environment and changing the insulation of homes … all of these need to be done anyway.

“The government can employ people who have been made unemployed, get them spending and give them more confidence and skills”.

Leave a Reply


This site uses Akismet to reduce spam. Learn how your comment data is processed.