The future economy in five parts

The future economy in five parts

The economy can be broken down into five parts: the essential economy, the bounce back economy, the areas that can flourish with support, areas that require consumer confidence and the areas where recovery will be difficult

 Firstly, the essential economy

We now know the essential economy includes health and social care, utilities (Gas, Electricity and Water/Sewerage), local authority services such as refuse collection and Environmental Health, education using distance learning, government services, policing, fire service and defence, essential maintenance,  undertakers, ICT , food and drink including their production, sale and transportation, life sciences, the media (TV, radio and newspapers), postal service, finance and insurance and certain manufacturing.

We have also got economic sectors such as public transport still working but at a vastly reduced capacity. We have seen the voluntary/third sector provide much needed services showing that many are essential rather than nice to have provision.

Secondly the bounce back economy

These are areas of the economy which will return to their previous levels of demand after an initial rush. This includes areas such as the DVLA, hairdressers, beauty salons, nail bars, tattooists, gyms, TV series, museums, art galleries, construction, car maintenance and servicing, local coffee shops and takeaway food shops.  People have been waiting months for them to re-open and in the first few weeks of opening there will be lengthy queues and long delays until we return to normal. This will be the V shaped recovery talked about by economists and will make all of us feel better. Within this group are professions such as vets and dentists who may not exist in Wales in the numbers pre lockdown and where recruitment from overseas will be difficult. I would have added opticians to this list, but the Westminster Government advice seems to be if you have problems with your eyes go for a drive to check them.

Thirdly Key sectors that will need support

This includes Universities, theatres and other performing arts venues, manufacturing, professional sport, and professional services. These are key parts of the local economy and will require support to recover. These are the areas post lockdown we need Governments at Cardiff and Westminster to concentrate on either using transaction capital for long term interest free loans or providing income guarantees. This will also include self-employed people who will need to rebuild their businesses having been in lockdown since March. These are key sectors of our economy and support in the short term after the economy re-opens is essential for the long term benefit of the economy.

Fourthly areas which will require consumer confidence

These include pubs, restaurants, local tourist attractions, hotels, and clubs. These will require both confidence that they are safe and people having surplus income to be able to afford these luxury items. The other is areas that depend on consumer belief in their economic well being which is when they buy new houses, new cars or invest in house extensions and substantial garden work. These require confidence in the economy and people being prepared to take on medium and long term debt.

Fifthly where recovery will be difficult

Will people and companies have changed how they work? We have seen many people working from home with productivity no worse and sometimes better than in offices. Will this continue because if it does then roads will be quieter, but it will influence public transport use, city centre coffee and sandwich bars, office furniture, demand for office space plus car park income. Have people changed their retail habits permanently, as more items are being bought online, and if they have what is the future of the high street.

Then there is foreign travel which will affect travel agents, aircraft manufacturers, airports and support services for planes and airports plus component and raw material producers for aircraft manufacture. This area needs support in both the short and medium tern from government to ensure it can once again thrive and prosper.

Whilst none of us can see into the future, the new normal may be very different to the pre pandemic normal.