It feels like there has been less going on this week, maybe it was just the aftermath of the various announcements easing restrictions or just in comparison with previous weeks, but it did feel like there was less happening.

Certainly, there has still been the stream of negative economic news, with job loss announcements, and economic gloom. Consumers are spending and borrowing less, all of which will gradually flow through the economy too.

In the business world they continue to thinkg about the future, with digital investment top of mind. There was even an interesting story of interest rates going negative, not notionally, but actually negative. How the financial services systems would or could have even reacted to this would have no doubt been a topic of conversation… it could have been another Year2K, albeit now less likely.

Outside of economics, the talk seems to be about returning to normal. The pandemic is still for from over, and it is likely to continue for some time (36months – and this is also the simple maths too).

However something this week switched and the narrative moved to normalization. Businesses are planning on returning and even trains running. Dentists clearly need to open too.

Maybe we have become used to the health toll, the economic impact has become too big and we have blinked, we are just getting bored, or history is simply repeating itself. Caution abounds however and we need to remain careful.

Have a good weekend everyone…. @chris_w_tweet

This week was dominated by the economic reality of the lockdown now really starting to be seen.

• The Bank of England predicting this could be one of the longest slumps for over 300 years.
• Elsewhere the impact on business services could be seen in surveys, with the expectation this would be the worse decline in living memory…..and of course…
• We saw some significant job cut announcements with both Rolls Royce and Virgin Atlantic in the headlines.

All of this spending is increasing and can be seen in the public debt figures, with some discussion/concern on how affordable this is and whether the schemes need to be tightened.

To counter these impacts the UK government has been announcing relief programs and this week saw the launch of the Bounce Back loan scheme for smaller businesses…. just like previous schemes the uptake was significant… 100,000 loans in the first day and this again put pressure on the banks and their call centres to process the loans.

The results of this are that there are expected significant increases in business insolvencies to come… and of course, we are already seeing declines in activity in key areas such as the housing market and car purchases… two-thirds of households think their finances are going to be affected.

The financial services sector is going to have to react, in order to control risk and losses. We are seeing this already, more visibly in the US, where there is already a tightening of credit controls for new mortgages, and on credit cards. With the earnings announcements last week in the UK, we should expect to see more of this here… gathering extra data to determine the current risk of default for customers in this current situation is going to be important and common going forward.

Although consumers are saving in some areas, in others spending is increasing. Energy usage, in particular, was highlighted this week. It is increasing, an extra 37% on average, due to working from home. This will flow through to any affordability considerations too.

The market and industry is reacting and innovating in light of all this. Sometimes constraints can drive creativity; video banking is becoming more common for example, as is the use and inclusion of open banking… will this is be the turning point that drives adoption… it may well be.

Work culture is likely changing, with BMO predicting that 80% of employees will change working patterns to include more home working. All of this requires technology and there have been some signs of a backlash against this… I suppose all of this is about finding out about what this ‘new normal’ is going to be, and it may not be just a virtual version of what it was before…!

Elsewhere the lockdown continues to have other effects.

• A story on how quiet the earth has become, without the rumbling of traffic… or how
• Someone recreating their local pub, with friends in virtual reality… a great project (althought not sure I have the time or patience to do this)

Certainly, the sky does seem bluer, and birds louder than before….

..But we do still need to remember the virus is still there…. we should not get complacent, even as lockdown fatigue sets in. Pressure to release restrictions is mounting, and we wonder what the future path holds, and how we can maintain the progress in control to date. I am just hoping with the better weather getting outside will help.

Fingers crossed for the next few weeks. Have a good weekend everyone…. @chris_w_tweet