Covid recovery: Why UK economy will bounce back – Bill Jamieson

Human ingenuity and enterprise will find ways to get the economy back on its feet, writes Bill Jamieson

Chancellor Rishi Sunak has warned the UK faces a 'severe recession the likes of which we haven't seen' (Picture: Jonathan Brady/PA Wire)

There is a truth overlooked time and again in crises and recessions – and the Covid-19 pandemic is no exception. It is blocked from view amid the torrent of anxiety and apprehension about missed targets, government failings and questioning of scientific advice.

Amid all this is the daily downpour of business failure and economic slump. Unemployment benefit claims have soared to 2.1 million. Chancellor Rishi Sunak has warned not just that any bounce-back will take time to develop but we are destined for a recession “the likes of which we have never seen”.

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It is hard to see any grounds for hope that we will ever recover from the loss and misery of this devastating pandemic. Indeed, the default belief is that we will never fully recover.

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This is no time for false optimism or hopes of a return to status quo ante. That status has gone. Nor should we try to breathe life into Bank of England governor Andrew Bailey’s assertion barely a week ago that the economy will exit the unprecedented slump “much more rapidly than the pull-back from the global financial crisis” of 2009.

But amidst all this, there is a hopeful and inspiring truth being missed: that there is within us, individually and collectively, a powerful instinct of survival.

Through every downturn and slump, we have pulled through to higher growth, improved well-being and better life chances. Recessions have been followed without exception by recovery and improvement.

Since the Second World War, the UK has had eight recessions. Reading the accounts of them would suggest our living standards and general conditions have barely changed since the grim austerity years of the late 1940s.

Looking further back, we have had some 14 recessions since the Great Frost of 1709, counting the Long Depression of 1878-96 as one.

As for the US, the world’s largest and most entrepreneurial economy, it has had 47 recessions going back to 1790. An economist’s bleak recital of decline and unemployment statistics would suggest a country permanently struggling with famine, poverty and misery.

Yet the more compelling story is one of corners turned, recovery setting in, and renaissance. Today UK households enjoy a standard of living way beyond the imagination of families in the 1940s. We think nothing of the huge improvements in health and medical care, the vast range of food products in giant supermarkets, car ownership a standard feature available to millions, fast food chains, the explosion of labour-saving gadgets around the home, mobile phones and the internet: in a myriad of ways we have moved on and up.

So how did that happen amid all those recessions and downturns? How did we pick ourselves up?

The key spurs to recovery are – as they historically have always been – adaptation, innovation, invention and enterprise. Together these drive the dynamic of progress. The more open the economic system, the speedier and more efficacious this dynamic performs. No system of government regulation and planning has been able to supercede the creativity of people left to their own imaginings, longings and desire to improve.

And here is another curious feature of this dynamic: it is not just impervious to recession but is spurred on by that constant, insatiable hunger for something better, something different and something new. It might even be said that recession is the mother of invention.

It is the most difficult dynamic for economists to capture in their forecasting models, so we assume it to be absent or of negligible consequence. But here are two examples where the current crisis has acted as a spur.

In the field of healthcare, from new drugs to protective equipment, there is now a surge of innovation underway which will bring an expanded range of prescription and treatments. Our desire to live more carefully will see new products for use around the home. And we will see changes in the way that healthcare advice and services are delivered.

Hand in hand with this is a major uplift in demand for locally provided goods and services. My local parish newsletter, previously a bland couple of sheets of timetables for church services and fitness classes in the village hall, has exploded to 13 pages of contact points, emails and phone numbers for services ranging from late-night store openings through to click-and-collect delivery services – everything from coffee cake to knife sharpeners. I sense this shift to local providers – corner shops and convenience stores – will be a lasting feature long after the coronavirus lockdown is lifted.

As for broader economic change, we will see greater internal collaboration between departments and business units, as well as external collaboration with customers and suppliers – essential if companies are to survive this recession.

I do not mean to minimise the impact of this recession or its grim statistics. But this should not blind us to our enduring ability to fight back, innovate, adapt – and recover.

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