The Time Machine: a glimpse of economic recovery post COVID-19, by Stephen Blackman, Principle Economist, NatWest

Stephen Blackman, Principal Economist at NatWest, provides us with a look at how COVID-19 has forced us to launch faster into the future in many areas of our lives, from online shopping, to working from home, and is likely to continue to do so long after the virus has been contained. 

COVID-19 is a time machine, transporting us to the future faster than we’ve had time to prepare. The dislocation we’re experiencing is us rapidly adjusting to this new reality.

Take how we shop. Lockdown has accelerated the trend towards online spending, from 19p in every £1 last year to 33p now. Consequently, delivery drivers, already one of the most common and fastest growing jobs, is growing even quicker. Nearly half of us are now doing some work from home and we’ve effortlessly widened our use of digital interfaces for varied interactions. Daily downloads of the video conferencing app Zoom have jumped from 56,000 in January to 2.13 million in March. Not all calls are team ‘catch-ups’. Many of us are creating new types of virtual connections as customers, patients, students, friends and family. We go online to work out or tour a virtual gallery. These trends aid diversity. And while they were inevitable, COVID helpfully hurries them along.

They also accelerate changes to the physical world. Before COVID our high streets were in flux. The winners, i.e., the more desirable, were transforming from transactional locations to places of participation, social connections and experiences. Leisure as identity and a cultural pursuit. The less desirable too were losing their transactional function, yet were struggling to find a new role. As more work from home, especially in higher paying jobs, this trend will quicken, and the gap widen.

Because they depend less on outsiders (commuters and tourists) towns have recovered faster than cities. So COVID-19 has exposed an urban tension we were largely ignoring. The very attractiveness of cities made them increasingly unaffordable for those that make them desirable: the performers and artists, the Deliveroo worker or a cleaner. And if the clustering effects of mega-cities can be met digitally, why would firms continue to pay for prime real estate. Were tier-1 cities becoming too costly?

A virus’s adaptability blends biology with the way we structure society, structures built on the values and preferences of the most powerful. So, when exposing societal fault-lines, pandemics also reveal our biases. COVID-19 asks us to reassess our attitudes towards the provision of dignity and care for an ageing population, or the reward and recognition for essential workers. It illuminates the limitations of liberal democracy. Society was already fractured. COVID urges we address this discord.

Like Pandora’s Box, pandemics’ lasting legacies may be hope. Cholera exposed the plight of the urban poor in the industrialising 19th century. The need for sanitation forced Parliament to fund Joseph Bazalgette’s London sewer system, a still functioning marvel of civil engineering. Pandemics not only demand change, but are one the few forces frightening enough to break vested interests, spur innovation and repurpose priorities.