Ease the lockdown but ease not the social distancing - Will businesses survive?
Johnson government outlines gradual easing of lockdown
Perhaps a surprise to no one, the UK is coming out of the lockdown and as mentioned previously, they are doing so in gradual phases. Some scientists have noted that the infection rate is still high and the lockdown should continue. I really do wonder whether the furlough scheme has entrenched people into the false sense of security where a world will pay you money to do.. nothing!
Perhaps the people who are dictating the livelihoods of millions of people being impoverished by the lockdown should consider what their own lives would be like if they were under the same circumstances. Would the lockdown lasted this long in that case?
Personally, I find it disgraceful that the ruling class continue to get their full cheques every month and live a slightly less convenient life, largely devoid of the crisis the rest of the country resoundingly feels whilst masquerading rules which they themselves DO NOT follow. America has begun it's voicing of anger after a catalyst of police brutality, but we all know that the protests and riots are not about police injustice; it is about the institution losing its legitimacy. I suspect the people in UK will soon have their own stand against the institution for which they believe has lost it's legitimacy.
Social Distancing.
Anyway, back to easing lockdowns. One of the seemingly axiomatic rules for opening up is the introduction of safer working conditions and the continuation of social distancing. That is, the physical distance between people of different households of at least 2m, and safe hygiene practices like using disinfectant, wearing gloves, wearing masks etc.
While masks have shown themselves to be more protective for other people and not so much yourself, I, like many other people choose to wear them, if only for a false sense of security. (It's amazing the psychological impact wearing masks can have)
Business as usual ÷ 5
But here's the rub. Social distancing measures, if followed, would essentially render businesses inoperable. Businesses operate on a margin, they have fixed costs, stuff like rent, inventory, wages etc. These all need to be paid for, regardless of the number of customers they will serve. If social distancing measures are to be followed, then some businesses will have to reduce their capacity by up to 90%!
Usually, this would mean that the prices of things will have to go up to maintain margin for the business, but is that going to solve the problem when the wider economy is going through a recession where millions of people have lost their jobs?
I think what will happen is there will be a rise in prices, possibly 20% in places like restaurants and cafes. But what about entertainment or hospitality businesses? Will they generate enough revenue to cover the overheads?
With social distancing measures in place, they are expecting about 10-20% of their normal turnover and also have to do "more" work as well.
It doesn't take a lot economic sense to realise that it is very likely a lot of businesses simply won't be able to make ends meet. The economy is going to contract at the fastest rate in history, and that's including the Great Recession, the Credit Crunch and the two World Wars.
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