The impact of Covid-19 on the UK economy has been severe and sudden. The Office for National Statistics (ONS) describes it as ‘significant’.
GDP basically fell off a cliff-edge, plummeting 20.4 per cent between March and April.
The indications are that we are heading for a recession, and the Bank of England predicts it will be the sharpest on record.
However, how businesses respond is, according to Javad Marandi, likely to be what truly defines this recession in the eyes of the British public.
What the pandemic and subsequent lockdown have brought into focus is the social importance of the economy and the values that we have in common, even as we have been isolated from one another.
This has implications for businesses facing the challenges of the post-Covid economic landscape.
Preserving the current system at all costs, with an automatic cutting of jobs in response to recession, is unlikely to go down well.
The reasons for this, however, are not just lockdown-related. Social consciousness has been on the rise for some time across a range of sectors.
For many businesses, the current crisis will put it at the top of the agenda, whether they like it or not.
The importance of social value
Social value quantifies the relative importance that people put on the changes they experience in their lives.
Businesses have social impact – on their workforces, on local environments and cultures, and on their customers.
People are more aware of these, and they will judge business owners on the position they take concerning them.
That response will influence which people will buy from, who they will work for, and who they will recommend to others.
In other words, social impact can have wide-ranging consequences.
Of course, some might argue that elevating social value and taking a socially-conscious approach to business are luxuries reserved for when an economy is stable or booming.
Recession means circling the wagons, cutting jobs and selling off anything that looks like it is not going to stay profitable.
But the mood of the country says otherwise.
People have made sacrifices, and many have died.
Yes, we can see an urge to return to some semblance of normality, and yes, sometimes the scenes of crowded sunny beaches or queues to visit non-essential shops might suggest a lack of social responsibility.
But there is an underlying awareness among the majority of people that things have changed, and that the foreseeable future is going to look considerably different.
Businesses, therefore, need to read the room correctly. Short-term solutions will not provide the answers we need to rebuild the economy and create long-term wealth.
What are we here for?
In modern times, we have had plenty of recessions before now, but we have not had a major pandemic causing them.
The psychology is different; Covid-19 has felt like an existential threat to our way of life.
It questions the whole purpose of how the economy works, and what value we assign to the different job roles and businesses within it.
There are, of course, hard facts to face: the economy has shrunk drastically in a short period of time. Many businesses may not find operating under current restrictions viable for any extended period of time.
But an economy where smaller enterprises are left to go to the wall and the bigger players cut thousands of jobs and indulge in asset-stripping does not represent the kind of world that people want to live in.
Sending out socially-conscious signals
The Government’s coronavirus rescue package for businesses, including £330bn in loan guarantees, sends out certain signals.
It may not work for everyone, and there are reports of businesses falling through the cracks.
However, it has set the tone and, whether the Chancellor intends it or not, it opens up the debate about what kind of economy we wish to have in the future.
But it is to do with looking at the challenges ahead and seeing in them an opportunity for change.
People understand that, fundamentally, the economy is central to their lives, but they want it to work for them, not against them.
Business needs to be more inclusive, so that workforces, and the local cultures they support and come from, feel they have a stake in the economy that is more meaningful, and less precarious.