It’s no secret that the COVID-19 pandemic has caused unprecedented levels of economic destruction, in addition to the tragic effects it’s had on peoples’ health and their lives. Industries such as hospitality and travel have suffered immensely, while many more parts of the economy are looking at a bleak future.
But while countless businesses have fallen and millions of workers worldwide have lost their jobs, some sectors of the economy have flourished off the back of the ‘new normal’. Many companies have successfully pivoted, sold new products or services, or simply found that their existing business is in much higher demand than before.
With the pandemic still raging, who are the economic winners and losers of COVID-19? In this article, we take a look at who’s fared best and worst from the pandemic.
Since the first lockdown began in the UK in March 2020, the number of jobs lost has risen exponentially. As of November, the British government estimates that at least 1.62 million people are unemployed across the country. The Economist estimates that, worldwide, over 500 million people have been put out of work as a direct result of COVID-19.
Many individuals and families have felt the economic hit first-hand, with countless companies becoming insolvent or being forced to cut down on staff as a result of lockdowns and the economic downturn.
In the UK, some industries have suffered much worse than others. Service and hospitality industries have borne the brunt of the pandemic’s economic woes, as high streets closed down and restaurants were forced to shut. Businesses that relied on face-to-face interactions and walk-in customers have seen a huge loss of trade.
Cinemas have closed, sporting events, weddings and music festivals have been cancelled, while restaurants and pubs have stopped serving, many permanently. Travel agents have become non-existent, while hotels have scaled back services massively.
Some businesses have pivoted. Restaurants and bars have set up delivery services or collection options, but this all came at an investment cost. Many companies invested heavily to abide by new social distancing regulations, only to be closed down again by the second lockdown or by regional restrictions.
In short, businesses and industries that rely on face-to-face services or physical venues have suffered the most, with little room for manoeuvre and no ability to become fully remote. This downturn of business in these industries has also had a knock-on effect further along the supply chain.
The biggest economic losers from the pandemic are the following industries:
So has anyone been a winner during the pandemic? While many more industries have seen a loss of business due to lockdowns or loss of clients and many more are simply in survival mode, there are parts of the economy that have seriously flourished.
The biggest winners are companies that were already well positioned to serve customers during lockdowns. These are companies that could operate remotely and that offered products and services that were needed during the pandemic.
Amazon has been one of the biggest winners, with their net income rising to 6.3 billion USD in the third quarter of 2020 (in the third quarter of 2019, it was at 2.1 billion USD). Other companies that have seen an exponential upturn in value include the likes of Zoom, which offered teleconferencing software to remote workers.
Businesses offering essential services have thrived too, with supermarket chains booming and anyone with a license to sell PPE making profits.
What Happens to the Worst-off Companies?
While the government has set up support systems, such as the furlough scheme for workers or bounce back loans for companies, many businesses still face the prospect of closure.
In the worst scenarios, businesses have become insolvent. Insolvency practitioners can be called in to attempt business turnarounds or corporate reconstruction in an effort to save as many jobs as possible.
Unfortunately these measures aren’t always successful, and many businesses have laid off workers or been liquidated.
What Does the Future Hold?
In the short term, things are only likely to get worse. The UK government estimates that unemployment numbers are going to rise to at least 2.6 million nationwide through 2021.
This is likely to be the biggest economic recession in centuries, but things will eventually get better. With a vaccine on the horizon, the end of lockdown could be closer than we think, while for entrepreneurs and businesses willing to adapt, pivot and evolve, it’s clear that with the right advice and planning there are still opportunities for the taking.
At Irwin Insolvency, they can provide all the help and assistance you need if you are facing Liquidation. They have been in the insolvency business for over 25 years and leave no stone unturned when helping you find the best possible solution for your current requirements.