It’s safe to say that we have all become rather fed up with hearing about the pandemic. But it’s not over yet and as we enter 2022 – our third year of Covid – what can we expect?
Will things return to normal? Or will we continue to navigate the “new normal”? What does 2022 hold for business, the economy and for companies in the UK?
Do Better Treatments Point to the End?
It seems unlikely that the world will be able to completely rid itself of COVID-19. And while different countries have tried varying responses to the virus, it now appears that striving for ‘zero Covid’ is likely unachievable.
However, the general consensus is that viruses like this gradually become less dangerous over time. And new anti-viral medicines, along with the vaccine, have brought hope that the pandemic will soon be under much better control. With better treatments, greater immunity and more widespread availability of the vaccine, COVID-19 could be set to become endemic in many countries.
This will mean finally learning to live with the virus. The result will be a reduction in non-pharmaceutical interventions, like lockdowns and business restrictions, which have had an adverse impact on global economies, international trade and travel.
Until the virus does become endemic though, negative economic growth and inflation will continue to make conditions difficult for businesses.
With no sign of any extended business support, nor the reintroduction of furlough schemes, companies will need to be cautious. Industries like hospitality, which has been badly affected by mandatory restrictions, will continue to see retrenchment.
The trading outlook from the Christmas period, although as yet unknown, may bolster the economy. But the Bank of England has just raised interest rates for the first time in three years, which will increase mortgage repayments and therefore limit personal disposable income.
Exactly how this will affect expenditure in the coming months is uncertain. But with costs rising, people are more likely to try to hold onto their cash than to spend it.
Continued Supply Chain Disruption
In the past few years, we witnessed lots of small ripples in the supply chain come together to become a massive tidal wave of problems.
Even some of the most robust supply chains were unable to cope with ever increasing global shipping costs, driver shortages, fluctuating demand or delays due to the blockage of the Suez Canal.
While companies can successfully bear shocks like this for a short time, ongoing disruption threatens to damage supply chains in the longer term, causing harmful delays and shortages.
If we have future lockdowns, the economy will suffer. Uncertainty around the prospect of Covid variants might bring the country to a halt or could have people avoiding hospitality or panic buying in case they need to isolate.
Any volatility will disturb the careful balance of the supply chain. Ever more accurate stock planning will be necessary and companies will need to place less reliance on just-in-time ordering.
In what has become known as the Great Resignation, workers have been quitting their jobs in droves. The trend was particularly strong in the US, where workers did not enjoy so much protection against the economic fallout of the pandemic.
But even in the UK, some 4.7% of workers resigned in the wake of lockdowns. The pandemic caused them to rethink their priorities so they could achieve a better work-life balance – perhaps to spend more time raising their children or to bring an end to a dissatisfying role in favour of landing their dream job.
In 2022, employees will continue to look for better careers or opportunities to take control of their working lives and to achieve greater joy and fulfilment.
For many, hybrid working has improved their mental health and wellbeing. Most employers have recognised this and many job adverts now state that hybrid working is available, if not standard practice.
But the shift in talent has also brought staff shortages. Companies will need to support flexible and hybrid working or they will otherwise continue to struggle for talent or see significant skills gaps. Hiring the right people will come down to offering working practices that put staff needs first.
A Transformative 2022?
In the turbulent and rapidly changing world of the pandemic, there are probably many surprises in store for next year. More than anything though, the lack of predictability will see UK businesses needing to be more agile and flexible to cope with whatever comes their way.