Covid recovery depends on government delivering support for business and EU trade deal, says CBI

‘Dramatic’ shift towards flexible working expected when business gets back to normal

CBI deputy director-general Josh Hardie (CBI)

Government must work hand-in-hand with business during the second national lockdown to ensure more of the economy can stay open than in the spring, the CBI has said.

Deputy director general Josh Hardie said ministers must ensure restrictions to economic activity are founded on real evidence and must present a clear exit strategy from the England-wide shutdown.

“Lockdown will hurt, but the right approach can lessen the pain,” he said.

Speaking to The Independent on the eve of the organisation’s first virtual conference on Monday, Mr Hardie said he was confident the UK’s private companies have the capacity to bounce back quickly once the “bleak midwinter” of Covid is behind them and lockdown restrictions are eased.

But he said their ability to deliver a swift recovery will depend on politicians providing the right support to business over the coming months and Boris Johnson securing a trade deal with the EU before the end of the year.

Mr Hardie said the second national lockdown must “learn lessons from the spring”. 

“This autumn, firms are Covid-secure,” he said. "Tried and tested financial packages are in place. Testing capacity is transformed and can expand further.

“More of the economy can stay open and more jobs can be protected if business, local government and national government unite. 

"That requires fast communication, support delivered hand-in-hand with evidence-based restrictions and a clear exit strategy. Lockdown will hurt, but the right approach can lessen the pain.”

Mr Hardie said business minds were entirely focused on the “two existential challenges” of surviving lockdown and whatever restrictions follow, along with “the imperative of getting a Brexit deal”.

The key to preserving as many businesses as possible in the coming months will be the readiness of chancellor Rishi Sunak’s Treasury to respond with agility to the fast-changing regime of restrictions.

“One thing we have established in the past few months is that when restrictions change, the financial support has to adapt with that," he said.

“What is important is that the Treasury keeps listening to the evidence and keeps being agile so that the support mechanisms are in place.”

Mr Hardie said that a rise in unemployment was certain “almost whatever the government does”. But he said that if the Treasury can hold to the idea that saving good jobs now is better than paying joblessness benefits later, then the impact can be “minimised, even though it can’t be nullified”.

“The more resilience we can hold onto now, the faster we can bounce back,” he said.

On Brexit, the CBI deputy took heart from the intensified negotiations over the past fortnight since Mr Johnson’s threat to walk away from talks, and left no doubt that a deal - no matter how slim - was a key to business bounceback in 2021.

“A deal is there to be done, so it is up to our political leaders to find the compromises needed to get it done,” said Mr Hardie. “If we want to rebuild, a deal is one of the key foundations which will make it possible.

“Business has provided all the evidence about the benefits a deal could bring. We are now waiting - with confidence and hope and expectation - for our political leaders to get that, the sooner the better, because even with a deal time will be needed to prepare.”

And he warned: “No-deal puts a very, very different complexion on the recovery from 2020. There is a huge responsibility on politicians in negotiations to make it happen. A deal gives real hope for recovery, no-deal makes it much more uncertain.”

While disruption can be expected with or without a deal at the time of transition to post-Brexit arrangements on 31 December, agreement with Brussels would set the scene for co-operation on issues like data transfer and aviation and future improvements to trade relations, he said.

“The pace of recovery will depend on the pace of vaccines and testing and the easing of lockdown,” said Mr Hardie. “But I think we can be confident that when that has happened, the underpinnings of the economy are still strong.”

And he said that new research conducted for the CBI suggested that the UK “won’t be bouncing back to where we were, we will be bouncing back to a different place” with a new outlook on work which could be good for carbon emissions and for local communities.

An Ipsos Mori poll of 573 businesses found that Covid-19 had ushered in a “dramatic” shift in attitudes towards flexible working and working from home, he said.

Contrary to some expectations, businesses have reported “no meaningful productivity drop-off” from staff working at home, and many are now looking to the possibility of making it part of their operations even after social distancing ends.

While 79 per cent of those taking part said their staff were working entirely or mostly in offices or other workplaces away from home in 2019, just 28 per cent believed that this would be the case in the future.

Some 47 per cent said they expected staff to split time between home and office and 65 per cent said that the experience of video conferencing during the pandemic would mean less domestic and international travel for meetings.

On average, the businesses said they expect to reduce their office space by 18 per cent. Some 63 per cent said that more remote working would allow them to recruit form further afield.

Describing the findings as “pretty upbeat”, Mr Hardie said that the knock-on effects would include reduced carbon emissions from commuting and business travel, as well as increased spending in community shopping areas rather than city centres.

“Increasingly we are seeing companies looking at work not as a place where you go but a thing that you do,” he said.

“I think that is really positive and it if goes right, that could herald quite a big change in 2021 and beyond. The trajectory was in this direction before coronavirus, but there’s no question that the pandemic has brought about a paradigm shift in the way people think about it.”