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Group Chief Executive
Coronavirus is bringing lasting change to the way we all live and spend our money and is ushering in a new era for our economy. It is a time of challenge but it is also an opportunity to do things differently and to build a more inclusive society that works for everyone.
Our new report, Isolation Economy, reveals that a kinder society has emerged during the crisis. We found that 64% of people felt that community ties had strengthened and 10 million adults had volunteered for community activities and organisations. Many people have donated food or money, while more than £1bn has been spent by those keen to help by continuing to pay cleaners and other services even though they can’t be used during lockdown.
This new and caring approach has appeared at a time of profound change in our economy, which has seen a £12.9bn shift in consumer spending habits. With eight million jobs furloughed up to May 17, and many more people working reduced hours, we’re spending much more on groceries, alcohol, entertainment, and hobbies and crafts. But across the wider economy, consumers are spending an average of £4.1bn less per week (£215bn annually) as a result of COVID-19.
Legal & General Group CEO Nigel Wilson says: “The COVID-19 crisis is creating fundamental changes to how we work, live and how we spend both our money and our time. Businesses should prepare for lasting change to the consumer economy and falling levels of demand that other areas of the economy will need to step up to fill. Billions will need to be invested in new growth industries like health, wellbeing and life sciences to replace falling spend and fewer jobs in traditional face-to-face consumer industries like travel, physical retail and hospitality.”
Billions will need to be invested in new growth industries like health, wellbeing and life sciences to replace falling spend and fewer jobs in traditional face-to-face consumer industries like travel, physical retail and hospitality.
To tackle these new challenges at a time of economic strain we’re going to have to think differently and to build on the values that have shone through during the pandemic. We must create a modern, prosperous society where everybody’s needs are met and nobody is forgotten. At Legal & General we had already begun working towards a more inclusive future before the crisis and have invested £26bn in real assets like homes, urban regeneration and clean energy to create better, cleaner and more vibrant places to live.
We’re also backing small businesses in sectors such as life sciences, which will become the backbone of our reshaped economy. We’re a partner in Bruntwood SciTech, which is creating a network of innovation districts across the UK to provide the environment that these companies need to form, grow and create jobs. In fact, Bruntwood SciTech’s Alderley Park Mereside Life Science Campus was chosen as one of the Government’s three COVID-19 testing facilities.
We’ve also made a £4bn commitment to our 50:50 partnership with Oxford University that will see both homes and innovation districts built in the city, providing skilled jobs and places to live. And in Newcastle, together with Newcastle University and Newcastle City Council, we’re investing in the Helix, a state-of-the-art innovation district that has risen from the site of a former coal mine.
COVID-19 has also shone a spotlight on our growing older population and shown us how difficult isolation can be for them. We’ve provided £20m to set up the Advanced Care Research Centre at the University of Edinburgh to look at ways to help people live better in later life. And we’re supporting the Royal Voluntary Service in its vital work to support our older citizens. We’re also investing in later living communities designed to keep residents active and happy.
COVID-19 is a huge challenge and a wake-up call for everyone. Health and wellbeing will become more important components of inclusive capitalism, and some elements of the new Isolation Economy with different consumer spending patterns are likely to endure.
Wilson adds: “COVID-19 is a huge challenge and a wake-up call for everyone. Health and wellbeing will become more important components of inclusive capitalism, and some elements of the new Isolation Economy with different consumer spending patterns are likely to endure even as social distancing is eased.”
Our study revealed that local economies and businesses could benefit as a result of these changes in consumer behaviour. More than half (60%) of respondents said that when the lockdown ends, they plan to buy more products in local stores to help the local economy, with 82% saying that the coronavirus crisis has highlighted to them just how important it is to have a stable supply of locally produced food and goods.
As big companies adjust to these new attitudes and an altered trading environment, we will continue to use our status as one of the world’s biggest asset managers, to demand that they do so in a responsible way. As we come through the crisis to a very different world we can emerge with a better, stronger and more caring society – a society based on inclusive capitalism.