Fang Zhao, Professor of Innovation and Strategy & Associate Dean Research and Enterprise, Staffordshire Business School
Covid-19 outbreak is not only a global health crisis but also an imminent economic shock. According to the Office for Budget Responsibility (OBR), the UK economy could shrink by a record 35% by June 2020 with over 2 million job losses. The International Monetary Fund warned Covid-19 would push the UK into its deepest recession for a century.
For businesses, it is estimated that the government’s lockdowns may cost 800,000 to 1 million business closures in the UK. The sector that is affected the most and is also the most vulnerable is small businesses which account for 96% of all businesses in the UK (Business Statistics, 2019). To prevent the catastrophic structural economic damage and mitigate the huge spike in unemployment, sound economic policy responses are urgently needed, which goes far beyond government handouts.
Economic restructuring is already happening. Cloud computing, e-commerce, online entertainment and delivery business are booming, being inflated by a huge surge in demand while retail (e.g. shops, pubs and restaurants) and entertainment industries (e.g. cinemas, theatres, and theme parks) and many others are suffering from heavy losses. Policy makers are confronting with the unprecedented daunting tasks to make strategic decisions on how to deal with the pandemic economic restructuring and crisis.
The pandemic outbreak has fuelled disproportionately the so-called ‘stay-at-home economy’. Working from home is becoming a new norm. For many this is the beginning of a new life and a new way of work for years to come. The implication for business is that it is time to rethink and reposition existing business models, processes, and target markets because consumer behaviours are changing fast and life will never be the same again.
Although small businesses are the hardest hit, they are also the most agile ones. Some small businesses have already responded and adapted quickly to market changes. For examples, some have moved their businesses entirely online and some shifted their target market from restaurants and hotels to individual consumers or new markets. New businesses are also emerging surrounding the stay-at-home economy, such as virtual hair salons and online gym classes. Over the longer term, Covid-19 has irrevocably changed the way businesses will run and compete over the next decade.
Researchers at Staffordshire Business School are working hard to help better understand the impacts of Covid-19 on the economy and society and help policy makers develop strategies to tackle the economic fallout and revive the economy. Our staff are also conducting research on the changing behaviours of consumers due to Covid-19. For more information on our research and partnerships, please contact Professor Fang Zhao, Associate Dean – Research and Enterprise at firstname.lastname@example.org.