Coronavirus: UK/EMEA Weekly Update – Call Briefing and Recording from 4.15.20

Below please find key take-outs from our April 15^th conference call featuring Steve Foots, CEO of Croda, a FTSE 50 British chemicals company; Amber Rudd, Teneo Senior Adviser and former Home Secretary; Wolfango Piccoli Teneo’s Director of Research; and Matt Lovering, Teneo Senior Managing Director and Head of Teneo's Transport and Mobility practice -  chaired by Principal of Teneo’s Situations and Politics practice and former Downing Street Director of Politics and Communications, Craig Oliver.

Listen to the Call

The Global Response and Moves Towards Exit Strategies

Asia

• China implemented a lockdown on 27^th January, when they had less than 600 cases and 17 deaths. The lockdown was lifted 76 days later on 8^th April, with over 3000 deaths.
• To enable the end of this lock-down, China has implemented measures including health certificates and temperature checks on people entering subways and workplaces.
• South Korea has 600 drive through testing sites doing more than 10,000 tests a day.
• Both China and Korea have shown that the exit process is gradual and needs to be staged very carefully.
• It is important to remember that in 1918, the worst damage came in the second wave of the pandemic, meaning that timing will be critical to ensure the virus is contained, health services can cope, and the economy can recover.
• Some countries that have managed the disease successfully up until now, including Singapore, have had to reinstate the stay-at-home instructions as cases surge again. In China, two regions had to reimpose the lockdown in recent weeks.

Europe 

• European economies are deeply integrated which makes coordination across Europe crucial. The European Commission today released a blueprint strategy that aims to ensure better coordination than during the earlier stages of the crisis, as well an exit roadmap.
• A number of countries, including the UK and the Netherlands, are developing health apps to allow tracing of the virus. These will need to be integrated to allow coordination and enable any prospect of international travel.
• These apps also lead to additional questions regarding data privacy and protection, especially when working with US tech companies such as Google and Apple. We are already seeing academics in calling on the government to explain how these platforms protect consumer data.
• Some European countries have begun to make progress on their own exit strategies. A number of the moves are symbolic, whilst the general sentiment is to continue with restrictions and social distancing policies:
  • In Italy, some shops (including bookstores) are now allowed to re-open, however the lockdown has been formally extended until 3^rd May.
  • Austria has also allowed some shops to re-open however they are subject to social distancing and other strict safety measures.
  • In Spain, the government has promised to distribute 10 million masks to enable safer movement but are struggling to deliver these masks effectively. People in manufacturing, construction and some services are being allowed to return to work but must stick to strict safety guidelines.
  • In France, the government has extended the lockdown until 11^th May and Macron believes that the re-opening of the country will be very gradual.
  • In Germany, Angela Merkel is meeting with regional states to ensure unity, with the lockdown expected to be extended beyond this Sunday.
• If other countries follow China’s timeline, Italy will emerge from lockdown on 25 May with Norway, Spain, Belgium and France following in the same week. The UK will need to wait until the first week of June, while the US (depending on the state) will not emerge until late June.

UK

• This will be the last week of ‘acceptance’ by the British public who have obeyed the government’s lockdown orders for the last three weeks. Whilst the government has been cut some slack while the PM recovers, there is an increasing feeling that the government’s response has been too slow and that there continue to be issues around PPE, in hospitals and care homes.
• One way to release some of this tension will be through a clear exit strategy. The government failed to look to the rest of the world in how to manage the crisis in the early stages and so must learn from other countries around the world such as Denmark and Austria who are taking steps to ease restrictions.
• We would expect Boris Johnson to start making decisions from next week which will hopefully reset confidence in the government and provide clear leadership.
• Main issue facing the UK government is with regard to SMEs:
  • 16.5 million people in the UK work for SMEs.
  • Currently only 2% of applicants have received support from the government’s coronavirus package. Huge numbers of SMEs will go bust unless the government changes the terms on this package quickly.
  • There is an increasing pressure to raise the government support from 80% to a 100% guarantee, as seen in Germany and Switzerland.
• The election of a new Labour leader, Sir Keir Starmer, will help the government to think more clearly about its response. Meanwhile, the UK Parliament is due back next week, allowing MPs to push the government and hold them to account.
• The UK’s own exit plan should initially focus on schools. In addition to trying to return to normality, there are a number of health consequences and child protection issues that come from having children out of school and restricted to homes.
• International coordination will be crucial, especially with other 27 European countries in order to allow travel, re-opening of supply and a resurgence of important industries such as tourism.

Ongoing Business Response to COVID-19

• Businesses should respond to the crisis focusing on three priorities:

1) People – the health and wellbeing of your people should be the number one priority. Mental wellbeing and helping to manage anxiety are equal to keeping people safe and healthy.

• Introduce a number of measures: encourage people to finish early around 4-5, get a couple of hours of physical exercise and limit screen time.
• Companies have a range of stakeholders, including shareholders, customers and suppliers, who should be treated as fairly and compassionately as employees.
• As said by businessman Andy Grove: “Bad companies are destroyed by crises, good companies survive them and great companies are improved by them.” This is only possible by prioritising your people.

2) Keeping the business running - constant scenario planning by the Crisis Management Team is key.  Link all the actions and decisions to your company’s purpose and establish a healthy rhythm of internal and external communications.

3) Planning for recovery – must start this process to seize opportunities and adapt to a changing industry. This should be a separate team from the Crisis Management Team.

Getting people to move around again: possible scenarios for the transport sector

• In the short term, we are looking at the re-opening of cities in China to develop forecasts about the return of movement in the UK and Europe. As the lockdown in China has eased, people have continued to be cautious about taking journeys.
  • The 12.5m citizens of Shenzhen have been reluctant to resume the use of public transport but walking and cycle sharing is up 150%.
  • Cars are the preferred mode of transport for longer journeys.
  • This follows the impact of the 2012 Olympics Games in London which saw public transport in London taking about 18 months to reach pre-game levels, as people opted for cycling and walking.
  • The 2020 summer holiday season is looking less and less likely for the aviation industry.
• In terms of the economic recovery, the OBR numbers depend on the assumption of a V-shaped recovery curve. Bank of America stats are more sobering and highlight the huge pressure on consumer spending and strain on public sector budgets which will create huge challenges down the line.
• The social impact of new ways of working are hard to determine at this stage, however early research shows some interesting trends.
  • 54% of people want to go back to work as before.
  • 17% want to work from home full time
  • Even small changes in working patterns could have a huge impact on transport and secondary economy.

As the Covid-19 crisis evolves and brings us all new challenges, we continue to support business across all sectors to navigate this period of uncertainty. We will continue this senior briefing series into the coming weeks, and welcome comments and suggestions from you as to the topics and the speakers that you would find it most helpful to hear from. In the meantime, we wish all the best to you, your colleagues and your families.