The Post-Corona World

rykov media after corona

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16.03.2020

With the current global panic and various measures taken to contain the virus (more and less effective ones), in about 4-months’ time we will be entering one of the most interesting periods in human history. The social and economic changes would drastically impact our lives for the next 20 years or so. I thought it might be interesting, to look past the next couple of days (for once), and see what awaits on the other side.

The health industry 💉

W️️e are after all in a health crisis, and after an ongoing battle with the NHS, the government is now forced to ally with it.

This is a strange one, as both are supposed to be on the same side, but the fighting over staff salaries and limited funding has intensified over the last 5-10 years.

The UK government has now been pretty much “forced” to give more funding to the NHS in the hopes of developing a new and effective solution for tackling the pandemic. If the NHS representatives play their card right, they could use this going forward to secure more funding. There is no doubt that the public under these extreme circumstances would side with the “hero” that has saved it from the monster, and on this wave of public support, new era for the NHS could start.

Whether the funding would be distributed correctly, is a different question. There is no doubt however, that COVID-19 has ended the stalemate and brought the negotiations between the government and the NHS into the next phase.

By the way, the same goes for the broke American healthcare system. It is clear that shortcomings of the response to the pandemic would be addressed in the post-Corona era, and would bring significant, and long overdue changes.

Curfews 🚨

️Governments all around the world have a chance now to test extreme measures, such as setting up regular curfews. No doubt in the future this would create precedent, and governments might use this as an excuse, in far less extreme cases, to control the economic activity and/or the population (especially in more authoritarian states).

Just a few things that such curfews (on a national and local scale) could be used for:

  • Suppressing any riots/public protests “to preserve the health of the nation”
  • Using health regulations to limit activities of businesses/business owners who act in opposition to the government

The above will also raise questions (actively discussed now) about the support/compensation for small businesses/regular workers/contractors for the period of time when no business can be done due to such curfew.

On top of it, if compensation is granted, there will be many more legal cases to come, debating whether some of the bigger players got a little bit too much of the “government-compensation-pie” compared to their competitors.

New jobs and projects 👨‍💻

This is truly a list of endless possibilities… Here we go. New initiatives, jobs and government-supported projects that will arise post-Corona:

  • Legal help with any claims brought during this period by individuals or organisations
  • Setting up new committees to assess the impact of such pandemic and effectiveness of the response
  • Development of programs that would help establish processes to minimise any negative effects should such crisis arise in the future (by governments, investment funds and businesses)
  • Apps tracking the spread of any disease/virus in real-time (+potential social and political implications from this)
  • New screening at the airports for potential “national health risks” (enter your own bullshit name). Remember 9/11? New threat means new regulations in the travel industry. Billions spent on these regulations… and the will have no affect by the way.

Private equity, stocks & markets 📈

Speaking of billions – the investment scene will change as well. Prior to the crisis many investors were already looking at biotech as one of the main fields to bet on long-term, and it was supposed to be the next big trend om 2020. Naturally, it is now JACKPOT, BABY! As human history shows, this will blow out of proportion. New Theranos will arise soon. Billions will be spent on companies that promise safeguards against the next Corona and probably 70% of them will go bust within two years.

Coming back to point 1 on failing healthcare systems – more and more money will be spent on isolated solutions that help with issues that those systems fail to address, leading to the rise of “private medicine at your fingertips”.

Investors no doubt will see the above as an opportunity to invest in indexes, such as S&P 500, as big data companies (google etc.) will continue to utilise tons of data on their users and sell it off to these health-tech companies and institutions. Their capitalisation will grow, as will the index, and we will see another repeat of a long bull market that we saw after the 2008 crisis. This will also lead to governments looking to access the health data on individuals – “past pandemic” will be used as an excuse “to prevent” similar spread in the future. (I.e. more legal cases, more debates on the matter, etc.)

New startups and other big players will fill the void left by companies that will go bust in the next few months due to the crisis. d

There will be an even bigger shift in terms of investments in different industries. Following the pandemic, more and more “players” will look to place their bets on businesses that are not reliant on delivery and supply chains. This is pretty obvious, but tech will continue to outrun more traditional businesses in terms of their cash flows and cash reserves (as well as revenue generation). Traditional businesses will look to merge and synergise with tech, or they will die off in the next 10-20 years.

Oil industry has been under attack by the environmentalist movements and the rise of electric cars for some time now. With the 2020 oil price war breaking out, it will piss so many investors off, that this will speed up its decline in the next 20-50 years.

Funnily enough, I believe that due to the current crisis, developments in the environmental fields (startups and government efforts) will be halted for some time, as priorities will change. Especially due to some social changes (see below).

Lastly, businesses will be a lot more cautious in the next 4-5 years, with less ambitious expansions, and thinking more about having cash in the bank to safeguard against… just kidding, it will pass after 6-12 months. Money will continue to be splashed around, and WeWork-s of this world will blow up here and there across the globe.

UK Businesses 💂

It just so happens that as part of my job I have an insight into the UK M&A market, and past and present trends. This segment of UK economy will undergo a change, too.

Travel, events and hospitality industries have been hit the hardest by the pandemic. However, the first two will eventually rebound. Smaller players will go bankrupt due to cut-throat market during and 6 months post-Corona, but businesses with more cash in the bank will get back to their pre-Corona levels. Hospitality sector will suffer the most from restricted travel, and then from adjusting to a post-Corona period, when demand rises up (disproportionately again). Bad market to be in.

Demand for retailers that offer products offline AND online will surge. Diversified (where possible) supply chains would be considered a great plus as well, to safeguard against possible similar crisis. Some of the smaller businesses (below £500k in T/O) will go under after the pandemic ends. This will be due to the fact that they won’t adjust their production and supply in time, buy too much stuff upfront, and miss the point where the public won’t be panic-buying as much.

The most steady businesses will continue to be: tech (as discussed under “investments”; see above) and construction. The former has great margins and minimal maintenance costs, and construction will always be one of the most active sectors in the UK, with assets to help finance deals, and continuous consolidation across the board.

Distressed opportunities will be on the rise for some time, due to the knock-on effect of the pandemic. Turnaround and insolvency practitioners will be in high demand, and will look to make the most out of this situation.

Remote working 💻

️ “Remote work” has gone up to 100-points mark on Google Trends in the past two weeks (as of March 15th 2020). While this is by no means a new notion the current situation let to more and more big businesses assessing their practices and work culture. After realising that they can save thousands if not millions on people working from home, many will cease this as an opportunity:

  • They will pay less for office space, staff travelling expanses and in-office equipment. (Sometimes it just makes sense to let people work from home) Landlords will begin to struggle, co-working spaces will begin to shut down, and the housing market will undergo a huge transformation
  • A lot of the workers will be transferred from full-time contracts to part-time (legal battles to follow, of course)
  • Even more work will be outsourced (as they do now, video conferencing and freelance hiring companies will continue to go up in value).

And as the result of all of the above…

Social changes 👪

…will follow:

  • Public transport will be used less
  • People will travel more (you are not spending money on public transport, meaning you can save it up and go abroad more often, and you can also work while on holiday 1000s of miles away from your boss)
  • There will be a “swing” to the other side: more people will feel like they are missing real life interactions with their colleagues (see more “help with loneliness” apps in 2020’s)
  • More advocates of “mixed working” will speak for a healthy in/out-of-office work life
  • Right-wing forces will blame the outbreak on globalisation and advocate for more closed borders
  • See more “hard-line” politicians come to power across Western Europe and USA (it won’t be all for worse, but it won’t be exactly great either)
  • As the result of the above, protectionist trade wars will become a regular occurrence, and countries will look to produce, supply and deliver more goods and services on local scale (this will greatly affect Chinese economy, but the effect won’t be felt for another 20 years or so)
  • Immigration quotas will become even more strict
  • More private companies’ moguls will come to power in the business world, rising up due to their access to deficit goods, and once again disrupt the social hierarchies
  • Witch-hunts and trials of officials who “didn’t act in public’s best interest” and supermarket workers/managers, who profited from deficit goods during the crisis will go on for years
  • Writers will use this topic to write hundreds of books, new Netflix documentaries on the virus will come out every five years or so. One will probably go on to win an Oscar.

And lastly, personal hygiene might actually get better, and people will wash their hands more often. Amen to that.

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