Consumer concerns over the rise in the UK infection rate is likely to hit social spending regardless of whether a lockdown is put in place.
Jonathan Haskel, Professor of Economics at Imperial College Business School and a member of the Bank of England's Monetary Policy Committee, was speaking during the first of a two-part webinar series hosted by MIT Industrial Liaison Program (ILP) and Imperial Business Partners, with BT.
The third annual Innovation Journeys series between the organisations look at how the world is responding to "an unprecedented level of disruption", including changes in the workplace, innovations in technology and global economic trends.
Professor Haskel was among the speakers at the first event entitled "The economics of recovery and growth" which also featured Dr Joseph Coughlin, Director at MIT's AgeLab, Aireen Omar, President for RedBeat Ventures at AirAsia,an Imperial Business Partners member and Michael Schrage, Research Fellow at MIT Sloan School's Initiative on the Digital Economy.
Watch the video from the event below.
Discussing spending trends in the UK during the coronavirus pandemic, Professor Haskel noted that social spending has fluctuated according to public concern over infection rates.
"In the UK there has been a rise in infections and that will probably feed through to a fall in confidence around eating out." Professor Jonathan Haskel
He highlighted UK data from the summer which shows that as the public confidence increased and people felt more comfortable eating and drinking in restaurants, pubs and bars, social spending also went up.
He went on to contrast this with the current situation: "In the UK there has been a rise in infections and that will probably feed through to a fall in confidence around eating out," he said, adding that this would reduce social spending "irrespective of whether there is a lockdown".
Increase in online spending
Professor Haskel highlighted how rapidly the UK economy has been changing, pointing out that although the pandemic has been serious, there "has been some recovery".
He went on to discuss the "big rise" in online spending as one of the trends that has emerged since the outbreak of COVID-19, noting that while this is not surprising, online spending has in fact remained high "even as in-store buying has increased".
"It's interesting to reflect about whether that might be a permanent feature of the economy going ahead," he said.
As part of the panel debate and discussion, Professor Haskel reiterated that for a large number of industries, the long-term recovery would depend on how much they are able to invest now in staff development, training and branding.
This echoed the views of Dr Coughlin, whose insights on demographic trends showed how important technology will be to enable social interaction and improve wellbeing across all parts of the population. Aireen Omar discussed how AirAsia Group pivoted during the crisis to leverage the technologies and platforms they launched through a new training academy to develop new talent pipelines.
He also talked about how the company has branched out to support wholesale farmers and SMEs in Malaysia who were unable to trade from their bricks-and-mortar retail outlets or physical marketplaces.
