Learning from the past – why the future looks bright for the UK economy
Economic crises and Black Swan events are, by their nature, hard to predict, and the impact of Covid has been continually unpredictable since the first ripples in January to the third lockdown of this year. Despite this, there is plenty of reason to feel optimistic about the coming years with both historical evidence and current sentiment pointing to a period of boom after months of gloom.
Previous economic cycles have shown that after a period of economic downturn, growth soon returns. From its low after the 2008 crash to its high before Covid, the FTSE 100 rose by over 3,500 points. From its low after the early 2000’s dot com crash to its peak in 2008, it rose nearly 3000 points. In the last such period of pandemic induced downturn, the period that followed was to become the roaring 20s.
The UK has seen an economic downturn or major event roughly every ten years in the recent past since the period of sustained post-war growth came to an end, and Coronavirus looks to have gotten the 20’s event out of the way early as optimism rises. Stock markets around the world are approaching record highs and even in the UK amidst a third lockdown, recruiters are working hard to keep up with the demand for new hires as business confidence rises.
The past few months have been a huge shock to every sector of our economy and lives, but this won’t last forever, and I do feel that we now have a long period of growth to look forward to. Looking back into history there is a trend of these kind of events giving way to growth every ten years or so. This crisis is unlike any other since the Spanish Flu and economic downturn of 1920-21 – which lead to what we now call the roaring twenties.
The fact that this downturn is so unlike any other actually bodes well for economic growth. Confidence is low only artificially and will jump once the vaccine programme has progressed to a point where restrictions can be lifted. People want to get out and spend, businesses want to grow and investors want to help them do that, it’s a perfect storm for rapid growth.
Pubs will bounce back along with restaurants and other hospitality, no one will want to stay at home after the year we’ve had and I really believe that. Working with local residents on redeveloping the pub and hospitality venue Rockwater Hove has shown me how much people want, more than ever, a place to come together as a community. We are not out of the woods yet, but the sun will almost certainly be shining when we are.
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