The long-term impact of coronavirus
Think about the last time you went on holiday for a week or more, away from normal life.
As you dipped your toes in the pool, or drank an ice cold beer, or strapped on your hiking shoes, you probably thought something like “I don’t know how I’ll ever go back to work, given how perfect things are here.” Maybe you dreamed about moving house, or country, pursuing a simpler way of life.
Generals always fight the last war. Over the next decade, every government is going to have to have a pandemic preparation strategy at the top of its priority list.
But once the holiday was over, how quickly did you slip back into the working routine? If you’re anything like me, it’s almost effortless. Without thinking about it, I’m on the tube, and at my desk, and in meetings, and at the pub, and doing laundry. Normal life snaps back.
How to predict the future
When making predictions about the future, we try to remember two things: First, changing human behaviour is difficult. Habits are hard to break. In the absence of constraints we tend to end up doing roughly what we’d normally do.
Second, the ‘Focussing Illusion’; Daniel Kahneman, the Nobel Prize winner who discovered it, called it the one concept that would most improve people’s lives, if they understood it properly. He summed it up by saying, “nothing in life is as important as you think it is, while you are thinking about it.”
Life after coronavirus
The world will beat COVID-19. Like any complex global project, it won’t always go to plan. Timelines are uncertain, and there will be setbacks over the next few months – we saw one last night with the failure of Gilead’s potential coronavirus treatment, remdesivir. But through a combination of science, planning, and cooperation, and a bit of good fortune, sooner or later we’ll find the answer.
And what then? What happens once lockdowns aren’t necessary, and we can breach the two metre barrier? You can find thousands of articles about this, largely from bloggers, reporters and columnists who have a lot of time to fill at the moment. Many of these articles are saying that everything will change. How we work, where we work, how we relax, how we communicate.
But remember, habits die hard, and our focus will shift. Once we aren’t in lockdown, people won’t think quite the same way. We believe that changes are likely to be gradual – which isn’t the same as irrelevant. We’ve picked out a few below that could matter for investors, and which we’ll be watching carefully.
Pandemic prevention becomes a priority
Generals always fight the last war. Over the next decade, every government is going to have to have a pandemic preparation strategy at the top of its priority list. Getting caught by surprise a second time would be unacceptable.
It’s easy to see that medicine is one area where politicians need expertise – they can’t sweet-talk a virus, or buy it off with promises of job creation and a brighter future. So we expect large-scale investment in medical infrastructure, in medical technology, and in research and development. This should benefit large health care companies, as public-private partnerships become the norm, and hopefully more funding for smaller start-ups in the sector.
Working habits change – but slowly
Everyone is getting very excited about the “death of the office”. However, that excitement misses some of the detail. First, while working from home (for those who can) has proved to be much more practical than expected, that doesn’t necessarily mean it is more efficient than being at the office.
Second, humans are social animals, beyond our immediate families. It’s a big reason we congregate in towns and cities. A few hundred years ago it was the village hall and the market, now it’s the office kitchen, the corridor and the lift.
However, we will probably start to see shifts in the threshold of where businesses decide they need an office. Where previously, ten people might have been the tipping point, it might now be twenty, or thirty. Perhaps departments of large businesses will be given autonomy to decide how much physical co-location is necessary.
That could alter the property landscape. Large skyscrapers previously filled by one or two companies might have to become more inventive with how they fill their space. So too, smaller properties – will a lack of demand mean that residential letting becomes more lucrative than commercial letting?
Universities have been forced to move their lectures online. For some disciplines, a return to normality will mean students returning to the laboratory, or workshop, or studio for practical experience. But for others, students will question why they need to be physically present (and not just because of their hangovers).
Interactions between students and lecturers will change – we know that people are much more likely to type in a question than to put up their hands and ask one! And clever solutions will need to be found to make sure that examinations can be taken online in the same conditions as in a room.
Some universities will adapt quickly – perhaps offering online courses at a fraction of the price of normal ones. Others will refuse, and stick to tradition. Would you bet against a big tech brand stepping into the space? Maybe even partnering with one of the world class universities to create a new education brand.
But as lecturers and students get more comfortable with distance learning, the university experience could become a lot more varied for the next generations of students. And the technology to facilitate that learning is likely to be a good investment.