Economics is truly the ‘dismal science’. Sadly there has been no time in my 50-plus-year career as an economist when the outlook has involved anything like the bleakness that now prevails. We are in deep recession as must be most nations – apart perhaps from China which appears to be well on the road to recovery. But can we hope for signs of sunny uplands as we scan the horizon?

The simple answer, for the UK, Europe and the USA, is not yet; at least the next three months will prove dismal indeed in these areas and elsewhere. But we have to believe that there will be recovery; and we should be working now to set a context in which that recovery can be achieved relatively speedily and relatively effectively, when the virus threat abates.

In brief we have to keep as many of our efficient businesses, across all sectors, in existence as possible – or at least fit and ready to re-open as demand returns. And we have to secure household incomes in such a way that demand can bounce back when the time is ripe. We have both demand-side and supply-side problems and both will need to recover speedily if the much hoped for ‘V’ shaped recovery is to be achieved.

The efforts made by UK and Scottish Governments on at least the economic front are much to be applauded. The support measures were announced speedily and are of real substance. Consequently, a high percentage of businesses will be assisted to survive; and a high percentage of households will receive sufficient income to get by.

However, this will be at a massive cost to the public finances. Indeed the cost of the support for ‘furloughed’ staff is set to burst already high budgets as the number of businesses laying off a very high proportion of their staff exceeds expectations. So in addition to the challenges on the demand and supply sides of our economy Governments will also face major public finance challenges. Debt levels will have increased dramatically around the globe by the time this wretched virus is defeated. It will take brave and able Chancellors and Central Bank Governors to manage our way through to a stable and sustainable future.

Of course the impact of the announced measures is not all-encompassing. Some businesses will miss out, as will a fair number of the self-employed. And Universal Credit is already over-strained and not able to meet a surge in demand at speed and at scale. There will be, indeed presumably already are, a large number of businesses failing and households facing major financial strains; and the failures and strains will not be of their own making.

It is already evident that UK output will decline dramatically in the first half of 2020 – decline by a rate that is simply unparalleled in the over two centuries since the modern economy evolved. But in the old economist’s adage ‘bygones are bygones’. So we must look to the future not the past. We must not only consider how to get back to where we were; but how to set a far more positive economic course than in the pre-virus days of yore.

The slump following the financial crisis in late 2008 was nothing like as severe as we are now experiencing. We have since seen recovery, but at a snail’s pace in the UK and Scotland with productivity growth effectively non-existent. We do not want a repetition of that zero productivity and negligible growth phase over the coming years.

It is much easier said than done, but businesses have to start as of now thinking what the future will hold for them in the post virus world. There will I suspect be changes of substance, for example in the way in which their markets operate and the form in which demand comes forward, for most key sectors.

Then they have to consider what these businesses can learn from their recent traumatic experiences in order to operate more efficiently in this evolved context. One simple lesson must be that in recent decades the extent of business travel at home and internationally has been hugely excessive. In this world of modern IT, face-to-face meetings are less and less necessary. Zoom, Facetime, WhatsApp or whatever can replace long air flights or crowded train trips.

Those businesses which survive will have learned other more sector-specific lessons regarding efficiency and customer service – and how to make best use of their staff teams. Those employed and self-employed through the dark days must also have picked up skills which can benefit them and their businesses going forward.

Two final reflections; we simply should not be asked to cope in the months ahead, as we fight to avoid a deep and enduring slump, with leaving the EU single market. We will have far more than enough on our economic policy plates to allow for further unnecessary and massive challenges. Likewise, 2020 and 2021 will not be the time for Scotland to become distracted by preparations for a further independence referendum, particularly while the UK and Scotland have major public finance issues to resolve.

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