Recovery is going to take a while
A word I’ve found creeping into conversations of late is ‘recovery’. By that I mean the economic kind.
I was talking this week to Swansea Bay Business Club president Alan Brayley. We’d both been participating in a Bank of England webinar. As you can imagine, the news wasn’t too great.
OK, you don’t have to be a financial whizz to work out that the global economy has fallen off a cliff in the last few months. Nor does a process of future recovery seem to be anything other than a very long haul.
The strategy proffered by various trading blocs is to build up impetus from what will be a slow start and then pursue incremental growth. It even sounds workable, if you say it quickly enough.
National governments inevitably opt for the trickle down approach. The convention is to put borrowed billions at the disposal of the larger outfits, crank up the engine and let the supply chain do the rest.
The trouble with this approach though is not just that it’s overly simplistic but it’s also a fallacy. Shareholders always come first in terms of payback and even your average integrated economy is loaded to ensure that money stays put – or offshore.
Here in Wales, where nearly two-thirds of private sector workers are employed by firms with less than 250 staff, there needs to be a lot more in the way of on-the-ground support to gear things upward.
I share Alan’s view that the availability of measures like so-called ‘bounce-back’ loans are a good start. As he points out, borrowing opportunities have never been cheaper and can provide the breathing space businesses require at these troubled times.
This includes an interim period while everyone adjusts to reduced turnover and the cost of investing in new safer working methods.
One example we discussed was how providing staff with personal protection equipment (PPE) could become an acceptable way of addressing the two-metre proximity rule to allow installation jobs on a construction site.
Swansea-based Ben Francis who chairs the Federation of Small Businesses in Wales thinks that bodies like Business Wales should be providing advice on working methods.
The FSB also wants Welsh government to introduce a Social Distancing grant fund and put together a hibernation package for tourism employers hit by the lockdown.
Amazingly, the business narrative remains mostly positive. The worrying aspect however is the silence to be heard elsewhere from firms who have gone to the wall and look unlikely to ever return.
Meanwhile, unemployment showed a rise of 856,000 to 2.1 million in April, the biggest monthly rise since modern records began in 1971.
As we make the most of the spring sunshine, the reality is that we’re all facing a very hard winter.
Meaningful health reform doesn’t come cheap
Something highlighted by coronavirus has been the contrast between the preparedness of the frontline NHS and the care home sector.
One reason proffered is the ‘mixed economy’ model we have in the UK whereby healthcare is directly funded and delivered while social care tends to be a privately-run operation. There’s also split functionality between the NHS and local authorities.
I happened to be speaking last year to a colleague who is based in Germany. His mother had just been transferred to a care home.
A statutory health insurance already requires him to contribute 7% of his salary before tax and his employers match that amount. Prior to the current crisis, care level is so efficient that national waiting data didn’t need to be collected.
The Federal government collects the insurance tax and makes good any shortfall. The cash is then dispersed among regional states who are responsible for hospitals, GPs, clinics, care and nursing homes.
Admittedly, there is nothing inexpensive about their system. Health spending in Germany accounts for 11% of GDP (UK is 9.6%) and there are plenty of additional insurance charges.
All of which spells out that when it comes to health reform, it’s only talk that’s cheap.