YOU could say that the less said about 2020 the better. But even when we look forward to 2021, in some respects, it’s 2020 all over again. This time last year, we were looking forward to the Olympics and Euro 2020. Once again this year, we’re looking forward to the Olympics and the Euro 2020.
But that said, in 2021 there are going to be a whole series of new trends that impact upon economies, countries and businesses. So, what are they?
Social distancing and hygiene sticks?
A vaccine has arrived and will see the pandemic end. But that won’t happen until later in 2021, and an end to the pandemic won’t mean and end of the virus. It will be with us long-term. The pandemic is also not likely to be a one-off and the likelihood is that other viruses will emerge and further pandemics certainly aren’t out of the question.
More broadly we’ve also become more virus aware and things like face masks could become normalised long-term, for instance among the elderly during flu season.
We could also see attitudes to large events such as sporting occasions and concerts change for good, as well as our tolerance of public buttons, handles and communal serving spoons. Hand sanitiser dispensers won’t go away at the end of the pandemic and contactless payments, automatic doors, voice-activated devices and use of sensors will only continue to grow.
Business travel will become niche
The world as a whole will become less footloose, as the era of cheap mass travel is consigned to the past, for the foreseeable future anyway. Things like overseas hen and stag parties won’t return to their former prominence in the year ahead, and indeed will aspirations for a big wedding be down-sized permanently?
Airlines and the hospitality sector will certainly be awaiting the answer. They’ll also be keen to see business travel return to its former glory. But the reality is that this won’t happen in 2021.
Indeed, Zoom calls will likely replace many business meetings long-term, and business travel will become niche in the year ahead and beyond. Whilst face-to-face meetings will always be an important part of business, the habit of them being the default setting has been broken and will become the exception rather than the rule.
Business travel in sense of travelling to and from and office has also been changed for good, with this move away from commuting to working from home persisting and continuing to impact on city and town centres.
'Techcelleration' will continue
2020 was a year of huge digital change and 2021 will see further techcelleration. The trends in 2020 were towards more online shopping, more business done by conference call and public services delivered online. 2021 will see this increasingly move into other areas and across age brackets as older generations become more tech literate as a vital form of social interaction.
Telemedicine for instance will become a real feature of our lives. During the pandemic, we’ve had to adapt to dealing with doctors via online means. But when the pandemic recedes, this trend likely won’t. An increasing number of us will continue to see our GPs online, and this will become the default setting. It could be a win-win for doctors and many patients, saving time on both sides and improving efficiency.
Indeed, this trend of techcelleration will be a feature across the health service to help cope with rising demand and increasing cost pressures. In business, we’ll also see an increasing trend towards automation, with the removal of admin support roles in favour of technology.
More red tape and bureaucracy, not less
2021 will see Trump’s presidency expire but the kind of trade tensions and protectionism that were a feature of his time in office won’t. Indeed, 2021 represents a landmark year regarding trade tensions, with the UK effectively leaving the EU Single Market and Brexit becoming real.
The reality of that will be taking back control of more red tape and more bureaucracy and the challenge for business is that they will need to get used to and adapt to new rules and regulations. All of these will be more burdensome than what has gone before, adding to cost. From a Northern Ireland perspective in particular there will be lots of new complexity regarding the Irish Sea border.
In many respects, Northern Ireland will be a place apart in the UK, and it and its businesses will be treated differently. The ‘does not apply to Northern Ireland’ small print will become even more prominent.
Spend, spend, spend, with taxation deferred
In 2020, we got used to UK Chancellor Rishi Sunak making jaw dropping spending announcements to support businesses, households and the economy through the restrictions resulting from the pandemic. Some expected 2021 to be a year when jaw dropping tax bombshells would replace the spending announcements, but that is premature. Indeed, the Chancellor will likely have a few more fiscal tricks up his sleeve to support the economy in 2021 and help secure a recovery.
So spending will be very much on the agenda in the year ahead, with significant tax rises likely deferred until 2022 and beyond. We may also hear more talk about negative interest rates a means to get businesses to invest and spend. I don’t think negative interest rates will happen as the vaccine has acted as a turning point for economic improvement and negated the need for such a policy. However, policy makers will want to see businesses spend more rather than sitting on their cash to boost the economy.
This is even more the case in Northern Ireland than elsewhere as we have seen historic underinvestment. On the consumer front, lockdowns have acted to cause many households to save cash due to the inability to spend. Indeed, by some estimates Northern Ireland households are sitting on over £1 billion in additional savings as a result. With restrictions easing in 2021, consumers sitting on this cash could start to spend, spend, spend again. Though where they spend will be key; high street, online, abroad?
Climate change overtakes Covid as the crisis in focus
Whilst Covid and the pandemic dominated in 2020, this temporarily crowded out the biggest issue facing the world and the economy. But unlike the pandemic, it won’t fade away and will only become a bigger and bigger issue. We’ve already heard some very big announcements in recent weeks about how the UK and other countries will address climate change. We will see much more of this in 2021, 2022, 2023…
Richard Ramsey (richard.ramsey@ulsterbankcm.com) is Northern Ireland chief economist at Ulster Bank (www.ulstereconomix.com)
