The clocks go forward this weekend and hopefully it also signals a step-change forward for the economy as well.
So what can we expect for this next quarter?
Well Brexit seems to have settled down in the media, but we know that complications remain and bureaucracy is still unresolved. Exporting goods has slowed in and out of the UK by a reported 20% and to the dismay of many, particularly the UK fishing and shell-fish sector. However, the unknown and uncertainty has large gone and we now adapt as we always do, or need to do. The expected Operation Brock on the M20 is in place and while queuing at UK ports has not yet proven catastrophic, there is always scope for ad-hoc issues and “Operation Stack” as we saw pre-Christmas which was largely complicated by pandemic issues. Recovery grows each month after a difficult start, but we do need to see a reduction in trade barriers and a significant recruitment in customs staff if we are to seriously improve the situation which remains very concerning.
COVID 19 Impact
The 3rd lockdown looks to be coming to an end and we all pray it isn’t just a temporary respite from a third wave. Our vaccination programme has been a massive success, particularly when compared to other developed economies, and this has to be the one factor that can keep a fourth UK lockdown at some distance. Clearly we are also told about being vigilant and cautious about allowing new strains to take hold. Ultimately, low mortality rates will be the deciding factor in the economy opening up. We hope that the government, who clearly have made errors affecting public health and the economy can deliver a strategy that prevents any future lockdown. We can’t pin all our hopes on vaccination, but clearly it is a massive success that gives us a chance to open up to normality.
So what about the economy?
After 12 months of lockdown, furlough, business loans and general hibernation, we are now about to emerge. Many businesses may not have made it and many may well begin to see a deserved mini-boom as restrictions relax and willing consumers make up for lost time. Economist are predicting that it will be two years to recover from the 10% fall in GDP suffered last year. Predictions move around and are greatly influenced by the vaccine roll-outs in each country. Some sectors may see a spike, such as Construction and Home Improvements as public and consumer spending lifts. Politicians will be split on recovery, but a general consensus exists on investment in infrastructure, housing, public service recruitment and general upgrades across our country as part of “leveling up”. We have yet to see plans on repayment of COVID impact and tax rises to pay for debt and investment. The budget confirmed a freeze on fuel duty which is good news. Clearly the economic strategy is a difficult balancing act and we have yet to see the levels of commitment to the promises being made, or not.
Changes will be inevitable
COVID-19 has accelerated the move of consumers away from the high street to online retail. Furthermore, the enforced take-up of home-working means that many businesses are looking at how continuity of this approach fits their new model. Many are looking to significantly reduce costs and improve productivity, particularly in businesses with high-cost office space and typically employing staff with long and expensive commutes. Clearly sectors such as real estate, travel and retail can expect significant changes and the survivors will need to adapt.
Transport and logistics resilience
Our own industry has emerged largely in-tact, because the economy is built around supply logistics. The vehicle manufacturers saw a big fall last year. Typically a 30% decline in new vehicle registrations which will create a need to catch up and ensure operators invest in modern fleets and upgrades in 2021 and 2022. It should also boost the used market where additional Euro 6 stock will enter the market. Flexibility, cost efficiency and managing cash flow will all be critical in an environment that is vulnerable and unpredictable. We see that already in the discussions we have with customers. They need solutions that create flexibility to grow and potentially contract as required. The RHA continues to lobby hard around the Brexit issues, Training issues and the Clean Air Zone policies that we accept as ideal, but these regulations ultimately remain idealistic in the absence of infrastructure and vehicles. Certainly the manufacturers are moving at a faster pace, but innovation in alternative drive-trains for long-distance Trunkers still seems a long way off.
So there we have it – a view on Q2. Given the massive upheaval forced upon us all, we have adapted and we should be thankful and mindful that we are still healthy and in business. We should be hopeful about the months ahead as we emerge from the dark Winter days behind us. We do now have many reasons for optimism. The big issues we have been dealing with may be fading, albeit taking longer than we hoped, but embracing the changes ahead of us, means that “normality” may be different but nevertheless a new version is thankfully almost upon us.