In addition to the usual updates around public health and the economy, this week’s COVID-19 webinar from Deloitte also provided advice on scenario planning for businesses.
Public health - Dr Jane Halpin, Director, Clinical Lead, Deloitte UK
With rising interest on whether we have reached a peak in the UK and when we can anticipate returning to a more ‘normal’ way of living, Dr Jane Halpin discussed the underlying public health data.
She reflected on the importance of understanding variance in case numbers in datasets and the need to interpret data carefully. It is vital to distinguish factors that could influence figures such as population size, diverse suppression measures and population density which can vary significantly between countries. We can conclude from the raw data, at this point, that new cases are falling in Italy and Spain. In addition, she noted that the UK has consistently tracked the pattern seen in both of these countries.
Similarly, when comparing mortality rates in the most affected countries, figures may reflect differences based on the number of tests, demographics, healthcare system capacity and imperfectly understood factors. For the latter, in the case of Italy there are higher numbers of intergenerational households compared to other European countries. This is having an effect on related factors such as the spread of the virus, not immediately apparent in the raw data.
There are also in-country differences in data collation and data release. The most accurate picture for decision-makers considering future policy, is to analyse data over a longer timeframe. This will be crucial when we will likely be in a different planning scenario early next month.
The UK and the global economy - Ian Stewart, Partner and Chief Economist, Deloitte UK
Ian Stewart discussed recently released economic forecasts by the Office for Budget Responsibility (OBR) and the International Monetary Fund (IMF).
The OBR estimated a three-month lockdown would generate a 35% contraction in UK GDP over the second quarter of this year. The IMF’s global view expects the world economy will face “the worst recession since the Great Depression”.
In this context, over half of the webinar audience (55%) polled expected economic activity to rebound only in 2021.
In terms of the actions policymakers are taking, a quarter of the audience thought that the response in support of financial markets (quantitative easing, provision of liquidity) was strong. A much higher portion (45%) of those polled said that policymakers were taking strong actions on supporting jobs and incomes.
Asked if there is any optimism from an economic perspective, Ian explained there are three key takeaways that may give some reassurance. This is a crisis that has emanated from outside the financial system so it is finite, the policy response has been forceful, and advanced economies have historically been very resilient during crises.
Scenario planning for businesses - Rick Cudworth, Partner, Risk Advisory, Deloitte UK
Rick Cudworth explored how businesses can plan for a ‘phase two’ of their response.
Phase one, which has now passed, meant that firms had to implement massive changes with little time available. As businesses think about the next stage of their response, safety, flexibility and resilience should be core principles for planning.
Three possible planning scenarios were outlined for the next 3-12 months which included: ‘Rising peak’ where levels of restrictions are similar to those today in the UK; ‘post-peak’, where there is partial, though limited lifting of some restrictions; and ‘towards recovery’ where most restrictions are lifted, but case isolation and contact tracing remain in place.
Organisations should be prepared to cycle between these scenarios over the next 3-12 month period. Countries and regions around the world are likely to be at different scenarios at any point in time, which will have impacts on supply and demand, particularly for global businesses and those with globalised supply chains.
It was also noted that there will be difficult choices to make particularly in the post-peak scenario and as the country moves towards recovery.
A few things businesses will need to deliberate for future planning include what a partial lifting of restrictions will mean for companies, when and how to re-open sites or offices, whether to implement private testing, and how finance will affect operational planning. Organisations were advised to closely monitor and learn from other countries policy response, that are ‘ahead’ of us in the curve, and not to underestimate the likely behavioural responses over this period.
Dr Jane Halpin
Jane leads Deloitte’s Clinical Team and is a qualified Public Health Medicine clinician. Prior to joining Deloitte in 2015, Jane had over 25 years’ experience in the NHS including roles as a Medical Director, PCT Chief Executive and NHS England Area Director. Since joining Deloitte, Jane has worked on numerous health care engagements for Trusts, health economies and others, spanning operational improvement, clinical strategy, service reconfiguration and health system integration. Jane has a proven track record in effecting strategic change, driving improvement and developing strong and effective teams, organisations and systems.
Ian Stewart is a Partner and Chief Economist at Deloitte where he advises Boards and companies on macroeconomics. Ian devised the Deloitte Survey of Chief Financial Officers and writes a popular weekly economics blog, the Monday Briefing. His previous roles include Chief Economist for Europe at Merrill Lynch, Head of Economics in the Conservative Research Department and Special Adviser to the Secretary of State for Work and Pensions. Ian was educated at the London School of Economics.
Rick has over 25 years’ industry-leading experience in Crisis Management and Resilience. He has been interim Group Head of Resilience for two global banks has supported and facilitated executive leadership in responding to crisis events. He is a recognised industry leader in his field and Chair of the British Institution Technical Committee for Continuity and Resilience.