MUCH has been made, for very good reason, of how the coronavirus pandemic is unlike any other crisis we have seen in recent decades.

The daily death tolls from this human tragedy, in the UK and many other countries, make distressing reading.

And governments around the world have put in place lockdowns aimed at saving hundreds of thousands of lives. Saving lives absolutely has to be the priority right now.

The restrictions put in place to try to reduce the death toll from Covid-19 have effectively shut down large parts of the economies of many countries around the world. And government support for incomes, such as that put in place in the UK, has occurred on an unprecedented scale in various countries.

Amid the tumult, there has been much talk of major changes to society once the worst of the coronavirus crisis has passed.

We have seen a much-warranted outpouring of gratitude from the public for the efforts of National Health Service staff and other key workers.

And it is certainly to be hoped that this appreciation will be reflected in years and decades to come in the working conditions and remuneration of these workers. Most people recognised the crucial part played in society by such individuals before the pandemic. Hopefully anyone who did not is in no doubt now, and individuals who might have favoured some kind of privatisation of the NHS will get nowhere with such dangerous ideology.

There has also been talk of a future with a renewed focus on community and far less international travel.

The former would be a good thing. However, in the context of the latter, greater insularity in a globalised world would surely be a retrograde step. Travel does broaden the mind, and promote understanding. It is worth noting that, amid the Brexit debacle, we have seen distressing amounts of xenophobia. Tourism is crucial to developing countries. It is also so important to many hundreds of thousands of people’s livelihoods in countries all over the world, including Scotland and the UK as a whole, as well as to the global travel sector. While environmental considerations should be taken into account, it is to be hoped that this awful crisis does not, ultimately, result in a narrowing of people’s horizons or in a severe shrinkage of the global travel and tourism sector.

Past experience would suggest that, once the worst of this grim episode has passed, things will return to normal on most fronts. There tends, in the wake of crises, to be an eventual re-establishment of an equilibrium that looks much like what it was before, with some negatives and some positives. Human nature is human nature, and corporate culture is corporate culture, and politics is politics.

The big change facing millions of people in the short term will of course be the huge financial challenges for many households and businesses triggered by this crisis. This is a situation that looks likely to get worse before it gets better, given that the huge government support measures which are thankfully protecting millions of people’s incomes at the moment are by their nature only temporary.

Crucial in the midst of the crisis in the UK is the Government scheme to pay 80 per cent of the wages and salaries of furloughed workers up to £2,500 a month. Also vital is the support put in place for the self-employed. Other emergency aid implemented by the UK Government and devolved nations is also playing a key role in warding off a financial cliff-edge for so many households and businesses. There are, of course, still gaps to be filled, and hopefully these will continue to be addressed as they are flagged.

However, what will define the future is the behaviour of business and political leaders as we move beyond this period of temporary support.

People will have different views on what aspects of life they wish to return to normal, and the areas in which they would rather see more permanent change.

In this column a fortnight ago, the importance of the poorest in society not having to pay the price for another crisis for which they were blameless was highlighted. It is to be hoped that, after throwing the kitchen sink at protecting livelihoods, the Conservatives do not repeat their mistakes of the past by making the poorest pay, as has happened with the grim austerity programme that has been running since the Tories came to power in 2010.

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Such a hope might be viewed as naïve. But its realisation is so crucial not only to societal fairness but also in terms of the speed and strength of the eventual economic recovery. Looking after the worst-off in society will give the economy the best chance of recovery because people in this situation have to spend all of the money they have to live. This money circulates around the real economy, rather than being squirrelled away domestically or in some tax haven.

The other very big thing that must be different this time round, as we start to look beyond the immediate crisis to the future, is the behaviour of companies.

The backdrop looks frightening.

Economists Danny Blanchflower, a former Monetary Policy Committee member who is a professor at Dartmouth College in New Hampshire, and David Bell, a professor at the University of Stirling, have warned that the UK labour market outlook is “horrendous”.

They estimate effective UK unemployment will amid the pandemic rise by around five million workers, from 1.34 million to more than six million, by the end of May. And they warn it could be “much worse” than that. They note some of these workers will be furloughed only temporarily but flag great uncertainty around this and observe the challenges will increase with the duration of the lockdown.

The National Institute of Economic and Social Research think-tank, which will be publishing the professors’ findings next week, previewed these yesterday as follows: “The prospects for British workers are ‘horrendous’ with more than half of employees in occupations most vulnerable to the coronavirus pandemic set to be furloughed or made redundant.”

A survey published yesterday showed the combined output of the UK manufacturing and services sectors has plummeted in April at by far the fastest monthly pace since comparable records began more than two decades ago. And this period, we should remember, takes in the global financial crisis. The composite output index in the survey, produced by the Chartered Institute of Procurement and Supply and financial information company IHS Markit, plunged from a previous record low of 36 in March to just 12.9 on a seasonally adjusted basis. The 50 mark is deemed to separate expansion from contraction.

The latest State of the Economy report, published by Scottish Government chief economist Gary Gillespie this week, includes analysis showing gross domestic product in Scotland could fall by around 33 per cent during the current period of social distancing. The Scottish Government noted this was “similar to estimates from UK and international bodies such as the Office for Budget Responsibility and the Organisation for Economic Co-operation and Development”.

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Howard Archer, chief economic adviser to the EY ITEM Club, noted yesterday that the think-tank expected the UK economy to contract around 13% quarter-on-quarter in the three months to June, assuming there is some lifting of restrictions on activity during this period. The EY ITEM Club sees UK GDP contracting 6.8% over 2020 as a whole.

Without wishing to sugar-coat this grim picture, we must remember such crashes in output are an inevitable outcome of the lockdowns put in place to save many thousands of lives amid this extraordinary crisis. And this is why the massive Government furlough support scheme was put in place – to preserve as many jobs as possible during this period in which large parts of the economy have been shut down and others have been dramatically reduced.

The key remains to try to minimise, as far as possible, the permanent damage from the dislocation.

Far too many companies are, in normal times, focused on endless cost-cutting and restructuring. It would at some calmer point in the future be worth reflecting on why this has been the case. There has been a tendency for short-term decision-making, often to the long-term detriment of businesses. The likes of the family business sector has for decades shown the importance of investing for the long term and looking after employees, whose talents should never be underestimated.

The fear is that companies, once they recover from the initial shock of all this and start to look beyond the furlough support, will wield the axe on jobs first and ask questions later.

Some businesses will have to cut costs to survive.

However, many others will not. They might instinctively revert to their usual cost-cutting decisions based on maintaining a certain profit margin, quarter by quarter. Such a narrow-minded obsession would be particularly damaging at the current time: for them, their employees and the economy.

For companies with the luxury of time to reflect, and there will be far more of those than will immediately recognise it themselves, this is a time to ditch the short-sighted management goggles and take a common-sense approach.

It is a time for brave decisions on staffing. In many cases this will involve taking a hit on short-term profits for longer-term gain. We must hope to see the back of impulsive cost-cutting decisions, based on arbitrary profit margins and with no heed of operational needs and future opportunities. No-one knows how things are going to look by midsummer, let alone by the end of the year. So businesses with scope to ca’ canny, to use an apposite Scots phrase, should take advantage of this room to see how things develop, and make reasoned decisions.

Of course, many businesses will sadly revert to standard behaviour when the initial shock of this crisis passes. But profit levels of the past will in many cases simply not be possible in the short term. Where they are, they may not be sensible at all, in terms of the long-term damage if businesses shed the employees they will need to give themselves a competitive advantage as the economy recovers, as it will.

What is more, there is likely to be heightened scrutiny by businesses’ customers of how employees are treated as the dust begins to settle. And this can be no bad thing.

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