Now that we are looking at the beginning of the end of the pandemic, it is time to assess the likely long-term impact of this experience on the economy. Calling the end of a pandemic is obviously fraught with danger, but at some stage we have to believe in science.
The various successful vaccines that have recently been announced will allow us to re-enter the 21st century in terms of the tools we deploy to fight this disease. For nearly a year, we’ve been using medieval technology; the quarantine has its origins in the 6th century when the emperor Justinian sought to stop a plague by isolating certain groups arriving in Constantinople.
Social distancing was used effectively in 14th century Venice as a way of reducing human contact and diminishing the spread of pestilence. Although they hadn’t figured out how, the city state’s rulers knew disease jumped from the sick to the susceptible. The word quarantine comes from the Italian “quaranta” or 40, referring to the number of days of isolation required.
News about the vaccine makes it feels like we are back in the modern world of progress and science. Rarely has the world been so happy to see these recent images of men and women in white coats with test-tubes. The rollout may take time, and there will be glitches along the way, but we can see the way out, thankfully.
But what are the long-term consequences of the virus and how has it changed our behaviour? This week, let’s discuss the end of the business trip.
The chief executive of a large global company told me that the most significant budget adjustment his company has made for 2021 and beyond is an aggressive cut in travel expenses. Like many multinationals, this company’s managers and executives would have been on the move, filling up business lounges at airports, ordering taxis, splashing out expense accounts in top-of-the-range restaurants and, of course, turning left rather than right at the doors of aeroplanes.
For many, the business trip was an unpleasant burden, but one suspects for many others, the chance to be on your own, stay in some fancy hotel, have dinner, get to know your colleagues, do deals and generally get treated like a sovereign adult, was a massive perk of the job.
Who doesn’t like ordering wine with someone else’s money after all?
In the weird and fragile world of corporate hierarchy, who can’t admit that the frequent flyer was a bit more glamorous than the sedentary pen-pusher? Theatrical recitals of an extraordinary busy schedule, complaints about the awful traffic in Milan or the endless queues at JFK, are examples of corporate bragging – a type of social signalling, indicating that the hectic traveller is at a higher status than the stay-at-home commuter.
The traveller was indispensable; the marooned, sedentary team-player expendable. (Of course, the truly powerful have people come to them. The difference between those who go to meetings and those for whom the meeting comes to them, is an entire sub-genre of corporate etiquette that we might get into another time. )
For now, let’s stay with the fact that Zoom and working from home have led to a complete reconfiguration of the whole notion of international business travel, which has been a company staple since the beginning of the jet-age. If people don’t need to travel and if productivity in large service-based companies has not taken a hit, despite the fact that people and teams couldn’t meet face-to-face, then why spend money on travel?
Slashing travel budgets is much less painful than slashing head-count when it comes to cost cutting. And, Zoom apart, many global companies will want to reduce their carbon footprint and be good global citizens rather than polluters.
All this means a profound change for many businesses – from restaurants to conference centres and, most significantly, airlines. It is estimated that while business travellers constitute less than 10 per cent of passengers, they generate three quarters of airline profits.
What goes for airlines, goes – but in smaller proportions – for airports too. However, the biggest knock-on effect is likely to be in cities that have geared themselves to cater for the business traveller. Cities like Dublin. Not surprisingly, Dublin is a mecca for the commercial frequent flyer, as it is home to so many multinationals.
Planners have transformed the city to suit the corporate executive: from the conference centres and venues that are entirely dependent on travel and entertainment budgets, to the glass and steel buildings on the docks that are likely to remain vacant – or at far lower rates of occupancy – because workers don’t have to come into the office every day.
Consider city-centre restaurants and high-end bars. It’s difficult to imagine most of these remaining open without the free-spending corporate credit card, particularly during the week. From Monday to Thursday, much of our city hospitality is sustained by the business traveller.
Think of all the hotels that are now under construction or have just opened in Dublin and, to a lesser extent, elsewhere in the country. Boutique hotels might appeal to the tourist at the weekend, but who is going to stay in these places mid-week?
Some will argue that calling time on the business traveller is premature. People need to meet face to face. Teams are inspired by the big night out, the celebratory dinner, or the few pints. There can be no doubt of this and, for many, the business trip is the thing that keeps them going as it is a break from the drudge of the commute, the daily grind and the relentless anxiety induced by performance targets.
We understand that people do business with people they know, and it’s hard to get to know someone on Zoom. The essential chemistry of the sale is the personal connection, and as the salesperson is the critical player in any business, isolating the salesperson, the persuader in chief, within the sterile confines of Microsoft Teams may backfire on businesses.
However, right now business travel is down 96 per cent since the start of 2020. It is difficult to see how this returns to anything close to 2019 levels. The hassled business traveller, in the aisle of the plane, horn-rimmed glasses steaming up as he or she tries to ram hand-luggage into an overhead locker, may be a creature we think we can do without.
But we will miss them, not least because a surprising amount of our urban economy depends on the much maligned international business traveller*.
* Listen to The Divine Comedy’s song, Come Home Billy Bird, for further description
On Monday night, some 1,000 young people gathered near the Spanish Arch in Galway and were roundly criticised for doing so. But in vilifying them, we forget at our peril that those young people are also Ireland’s future.
They will pay for your retirement and will propel the country forward. They will take the risks, create the companies, music, art and culture of 21st-century Ireland. They will possibly manage and navigate the country towards a United Ireland.read more
We could be witnessing the beginning of the end of the United Kingdom. The centrifugal forces of competing nationalisms are strong enough to recast the old order and to redesign this part of the world in a way that has not been seen since the Tudor era, when England started its Imperial project in Ireland.
The centre now struggles to hold because nationalism is being driven by the centre. Nationalism is now Whitehall’s default position.read more
This week, we’ve had so much incoming economic information, it’s hard to know where to start. News that the economy is in a recession confirms what we all knew.
Likewise, Google’s decision, which it came to well before the rout in tech stocks this week, not to take a large office block in Dublin 2 is not such a surprise and is a portent of things to come. As this column argued a few weeks back, commercial property in Dublin and other major tech-focused urban centres, like San Francisco, is in for a torrid time.read more
While we are still convulsed over Phil Hogan, the EU has moved on. This week, the powerful head of the German Bundesbank, Jens Weidman, sought to reframe the battleground for 2021 and beyond.
The future of Europe will be a struggle between the North and the South and, more specifically, between Germany and Italy, Europe’s two manufacturing powerhouses.read more
Another lockdown will destroy the economy unless we change direction. It’s really that simple, and it is because the banking system no longer works as a distributor of capital in the country.
Our Government and ECB have approached the crisis in the same way: cutting interest rates to zero to coax businesses to borrow and to encourage banks to lend. As a result, banks are the critical intermediary between the Central Bank, the State and the economy.read more
During the first great agricultural revolution (10,000 BC to 5,000 BC), when humans moved from being hunter-gatherers to farmers, settling in small villages and ultimately towns, the world human population is estimated to have increased from four million to five million.
In the next 5,000 years, from 5,000 BC to the birth of Christ, the human population is thought to have increased from five million to 100 million. In this second 5,000-year period, the human population increased approximately 25 times whereas in the first 5,000-year period, the increase was marginal. The reason for this disparity is that the earlier five millennia of domestication were the most lethal years in human history.read more
Pepare for carnage in commercial property. In the past few years investors have piled into the Irish commercial property market, with a particular focus on Dublin. Initially, it was international players but latterly, as is always the case, Irish financial firms have been putting Irish investors’ and pension fund money into the mix, adding to the frenzy.
By the beginning of this year, average annual Dublin rent was €673 per sq m, placing Dublin just above Geneva and Milan but below London, Paris and Zurich. It ranked as the fifth most expensive city in Europe.read more
In Mickey Bradley’s book Teenage Kicks: My Life as an Undertone, the bass player reveals that without Derry Credit Union, set up by John Hume in 1960, The Undertones might not have happened.
On June 15th, 1978, The Undertones had blagged their way on to the bill of a battle of the bands in Belfast, hosted by the legendary Terri Hooley of Good Vibrations record shop. Belfast was home to Stiff Little Fingers, whom The Undertones had just seen play in Kelly’s of Portrush. SLF had released the highly charged political single Suspect Device under their own record label and had just signed a new deal with the most happening independent label, Rough Trade. For the Derry boys, Belfast was big time.read more
David has been writing for almost 20 years and there are plenty of articles covering some of the most turbulent times in the world economy.
Head over to the archives page to view all published articles.