Hope and challenges on the horizon for businesses in 2021 | Deloitte UK has been saved
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While the recent news of a vaccine for COVID-19 is extremely positive, this quarter’s Fraser of Allander Economic Commentary, supported by Deloitte, highlights that the ongoing economic crisis from the pandemic remains severe. Government intervention has mitigated some of the human cost of the economic downturn for now, but there are continuing challenges on the horizon. With the end of the furlough scheme, unemployment is forecast to rise to 7.5% in 2021 - almost double what we’ve been used to in recent times - while inflation levels and wage growth will remain low.
While unemployment is not just a concern for young people, this is a group that has been disproportionally impacted by the COVID-19 crisis. From the teenagers facing education loss and exam disruption to those starting out in their careers. Earlier this year, Deloitte’s Global Millennial Survey explored the views of millennials and Gen Zs and found that almost 30% of Gen Zs and a quarter of younger millennials had either lost their jobs, or been placed on temporary, unpaid leave due to the pandemic.
This is something recognised by Scotland’s public too. Our latest State of the State report ranked opportunities for young people in Scotland as the country’s greatest concern as we come out of the pandemic, with 68% of those surveyed citing this point, in comparison to a UK average of 58%.
While the Scottish Government has already acknowledged this and introduced measures such as the jobs guarantee scheme and the national transition training fund, the private sector has a crucial role to play. As businesses look to rebuild following the pandemic, they have the opportunity to innovate and transform and create much needed skills, jobs and employment opportunities.
Climate change has also been brought into sharp focus by the pandemic and Scotland’s support for a green recovery is another key takeaway from this year’s State of the State. More than half of Scotland’s public (53%) believe that tackling climate change in the economic recovery from coronavirus will create jobs and boost the economy, compared to the 45% UK national average. In Scotland this should perhaps not come as a surprise and we do have a unique opportunity to develop world-class technology and skills in the renewable and clean energy sectors.
As the public mood indicates that economic recovery should not come at the expense of environmental targets, businesses are likely to take the lead from public bodies and governments who are increasingly conscious of climate-related investment. Additionally, a mental shift in how businesses perceive decarbonising the economy could follow.
Thinking ahead to the next twelve months, while much is unknown, it can be argued that 2021 should aim for a recovery that prioritises and pursues the potential of green growth, which has the scope to deliver jobs and opportunities long-term, for young people and beyond.
This progress may be accelerated with the successful deployment of a vaccine, which could support strong rebound activity in 2021. However, businesses are far from out of the woods, and leaders should continue to build on their operational resilience to ensure they are in a strong position for what will likely be an uncertain start to the new year.
Deloitte supports the Fraser of Allander’s quarterly Economic Commentary – you can find out more about the Fraser of Allander here.
Stephen’s experience over the past 27 years has always been exclusively with retail financial services clients. Stephen is a member of the Board of Deloitte, and is the Chairman of Deloitte’s own Audit & Risk Committee. Previously Stephen worked on secondment for the EBRD in Eastern Europe, and spent 6 years in South Africa where he worked with local financial institutions. His present external audit clients include a number of regulated banks and other retail financial services businesses; including a number with an international presence. He also leads a number of propositions in the Challenger bank space, and leads a number of assurance and advisory projects in this space; including internal audit arrangements, regulatory advisory work, and work on assessing corporate governance and risk management frameworks. Recent other projects in which Stephen has been involved include: leading a HM Treasury CCA investigation resultant from a significant redress programme, leading the reporting accountant work on the IPO of a now listed bank; leading the due diligence on behalf of a number of investors into a failing Building Society, and Undertaking a number of S166 reviews on behalf of the regulator in relation to corporate governance and risk management at Challenger Banks.