Universal Panacea: How will business be tied to the success of the Covid-19 vaccine?
As the vaccine for Covid-19 started to roll out across the world by June 2021, professional advisors and their clients were becoming cautiously optimistic that business would start to recover – in certain sectors at least.
By mid-June, upwards of 2.7 billion vaccine doses had been administered globally, which worked out at about 35 doses for every 100 people. But the distribution of the vaccination programme around the world was heavily skewed in favour of richer countries, where people were vaccinated 30 times faster than in poorer nations.
To return the world to some form of pre-pandemic normality, it’s estimated that in the US alone up to 75%-85% of Americans would need to be vaccinated. With just over 1 million jabs being administered per day in the US, it would take to the end of the year to vaccinate that many people. Moreover, despite new vac – cines appearing in different jurisdictions by June, many experts admitted it would be another 12 months at least before there would be a high level of immunity across the world. This would continue to have a significant impact on people doing business across borders in particular.
Nevertheless, for professional services advisors and their clients in these jurisdictions, the benefits of the vaccine were quickly starting to show as coronavirus cases and death rates dropped sharply. The long hoped-for economic upturn would possibly be just around the corner as the World Bank predicted significant growth for many advanced economies during the next 12 months.
And this economic boost off the back of the vaccine rollout couldn’t be more timely.
During the past 18 months, across North America, Europe and Asia, governments have been bailing out businesses and inject – ing huge aid programmes into their economies. The aim was to stave off an avalanche of insolvencies forecast in all jurisdictions.
For many advisors this state aid would only delay the inevitable and in June insolvencies were still down year on year almost everywhere. In the UK, total company insolvencies for the first quarter of 2021 dropped by 22% compared to the final quarter of 2020 and were down a huge 38% compared to the same quarter in 2020.
In other jurisdictions it was a similar story where the number of insolvencies had consistently dropped as a result of govern – ment aid initiatives. While many predict the avalanche of insol – vencies will happen in 2022, advisors are also seeing a huge drop in cross-border M&A deals as a result of the pandemic. They admit this will not pick up anytime soon.
Elsewhere, on a more positive note, many businesses have been quick to adapt to the new circumstances and those that had invested in technology pre-pandemic found themselves outstripping their competitors.
As the pandemic rolled out across the world, many firms in all sectors had to adopt new technology models for their business operations, which included the use of mobile meeting apps, file sharing and using online apps and channels for sales, service delivery and marketing. What would probably have taken years to implement in most sectors (including the legal sector) sud – denly appeared overnight.
Businesses shifted to remote working and virtual meetings and up to 25% of workforces in advanced economies were pre – dicted to be working remotely without losing any effectiveness. Forward thinking businesses also started using hybrid working models and companies staggered employees who attended the office, reducing office space and urban travel.
As employment went remote, so did consumerism, including shopping and entertainment. In the US new online grocery shoppers accounted for up to 50% of online consumers, many of them older people who had made the transition to digital technologies. Meanwhile, big out-of-town shopping malls were predicted to be a thing of the past, certainly for the foreseeable future, as young and old alike shopped and even browsed online.
Going forward, as the vaccine rollout progresses and the pandemic recedes, these new operating models – along with changes in consumer behaviour – will continue as businesses take advantage of the new technology-focused environment.
Many business leaders and professional advisors now believe that despite the vaccine, many companies will continue along this new digital economy. Those worst-hit sectors such as hos – pitality, tourism and travel will possibly need years to recover – indeed, they may never recover to pre-pandemic levels.
In this virtual series on business and the Covid-19 vaccine, IR Global members discuss why the pandemic has changed everything – and how the vaccine is helping to shape the future of work. As one member said: “At the moment all queries are dominated by the Covid question. What you can do, what you can’t do, what you’re restricted from doing, how you adapt your business and even how you deal with your employees?