The UK economy is projecting new confidence after a difficult year
As lockdown restrictions start to ease, the UK economy is projecting new confidence after a difficult year. According to the Office for Budget Responsibility, the UK’s economic growth in 2022 is set to be the fastest since 1948. Also, Focus Economics announced that due to the vaccine roll-out, consumer confidence in March 2021 had increased. Although confidence is still below pre-pandemic levels, it is another positive sign that perhaps we’ve turned a corner.
The past year has allowed people the chance to reflect and re-evaluate how they live their lives. As people moved indoors, we saw the rise in remote-working, online shopping and customers looking for more local and sustainable products and solutions.
From a greener economy to changes to the way we work, is this spring the dawn of new hope?
Supporting local businesses
With millions of people across the UK unable to leave their homes since the pandemic began, there has been an exponential growth in online shopping with the Office for National Statistics data showing that by last August online sales were up almost 50% on the start of 2020. This has had a devastating impact on the high street, as the Centre for Retail Research recently reported that almost 190,000 retail jobs had been lost since March 2020 with the long-term trend towards more online shopping and fewer retail outlets really accelerating.
People across the UK are looking at how the Government can support businesses, with retailers suggesting a 'Shop Out to Help Out' scheme, to support small independent shops according to the BBC.
With many non-essential shops having reopened on 12th April, the question now is whether over time consumers will return to the high street or if the switch to online is a permanent one. In an article from Yours, Andrew Goodacre, CEO of the British Independent Retail Association (BIRA) said, “Generally, what’s happened is that in lockdown, people realised what was available to them locally and have been pleasantly surprised by what they found so want to keep shopping there.” This suggests there is now an appetite to support nearby shops and the coming months will further show whether this trend is set to continue. Perhaps the move will be towards a greater focus on local, independent stores with high-street focussed chains suffering the most from any ongoing shift online.
The green industrial revolution
Back in November 2020, UK Prime Minister Boris Johnson announced a ten-point action plan to stimulate the green industrial revolution. This includes plans for electric vehicles, investment in energy-efficient homes and improvements to the natural environment. Whilst welcome some of the government’s actions since, including abruptly cancelling the only scheme focussed on improving existing housing stock, perhaps call into question just how much support such measures have across government. This can be despite the evidence showing the positive impact these types of plans can have on employment as well as their environmental impacts.
Covid-19 has provided the opportunity for banks to evaluate what they are doing to be more sustainable. In a guest article for The Prince’s Responsible Business Network, John Elkington, Founder and Chief Pollinator at Volans said, “Beyond Covid-19, the unfolding climate emergency is also changing what it means to be a responsible bank.” He further spotlights financial institutions which encourage people to use their money to provide positive change.
In January 2021, Deloitte's Better Banking Survey found that UK customers are demanding greener financial services with more than 60% saying they would leave a bank after finding out it was linked to environmental or social harm. Now that lockdown is easing, people may look towards greener solutions, choosing ethical services that aim to do good with their money - great news for us as well as others like our friends at Triodos.
A new way of working
Even once the pandemic is over, recent reports suggest that millions of people will continue to work from home with employers offering more flexible working arrangements according to People Management. Former Bank of England Deputy Governor Sir Charlie Bean, recently said that home working was “here to stay” after speaking with the PA news agency. He also stated that cities would change forever, with more flexible working meaning, “We won’t have rigid commuting times… we’ll see an evolution of the city to reflect that.”
If remote working becomes commonplace after the pandemic, governments will need to look at how they can support this development. During a United Nations Conference on Trade and Development (UNCTAD) event, Acting Secretary-General Isabelle Durant said that Covid-19 had “sped up a digital transition that will have lasting impacts on our societies and daily lives - for which not everyone is prepared.”
The UK government has stated that households may be able to claim tax relief for additional household costs for those that work from home, for all or part of the week. This helps to support with heating, metered water bills, home contents insurance, business calls or a new broadband connection. It remains to be seen whether the Government will announce further financial support to help people improve their home working environments, though bearing in mind some of Prime Minister Johnson’s recent ill-judged comments about people “having had enough days off” perhaps this is unlikely.
The evolution of banking
Due to travel restrictions and many bank branches, like our own, changing how they operated during lockdown, online banking has seen a huge uplift with 83% of people intending to use it once restrictions end, according to research from Virgin Money UK.
The pandemic has accelerated change that was already progressing before March 2020, with the number of bank branches roughly halving between 1986 and 2014 as a consequence of online banking according to UK Parliament. The report further states that roughly 10% of the rural population lives at least 10 miles away from their bank’s closest branch, leaving many without direct face-to-face access to finances.
At Bristol Credit Union (BCU), our digital platform is key to our future expansion, helping us to meet our members’ needs through innovative technology, anyplace, anytime. We’re also aiming to become the first choice for ethical and affordable finance in South West England.
We recently announced that our merger with Wyvern Savings and Loans is now complete, helping nearly twenty thousand people access our services across the region. The Credit Union is progressive and we work hard to understand our customers’ ever-changing needs and adapt our services to make them as accessible and inclusive as possible. The coming months will allow us the chance to create more jobs for our communities, whilst addressing net-zero carbon targets, helping us to make a better world for all.