In this series, members of the Cerno team reflect on the crisis and provide detail on their work and domestic lives.
For our next interview, we caught up with Nick Hornby, Managing Partner to hear his thoughts on life during this time, and what the lasting consequences might be for the UK and wider societies.
What do you think are the longer-term consequences for the UK as a result of this crisis?
As humans, we are more than likely to go back to the way we were doing things before, and as it stands, I do think we will revert to how life was, but some things will clearly change for some time.
I do think that we will live in a much more socialist world, in a good way, as we move out of this period. We will become more aware of the value to society that the cleaners, NHS frontline staff, bin people, bus and train drivers have. Indeed, all of those workers providing the crucial infrastructure that we rely upon to make our normal world possible.
We are aware that the government is ultimately trying to set parameters for society going forward. There will be a feeling that we should be doing more to help and support these people that turn the wheels of society. This will come through higher taxes for the wealthy, and we hope, an increase in the wages for those key and necessary workers.
Ultimately I think that the lasting impact of this crisis will highlight the differences in society that weren’t necessarily so visible before.
For example, look at what has happened in New York City. The virus hugely impacted those from BAME societies on lower incomes, whereas some of those with second homes outside the city were able to escape and have largely been unaffected by the virus health-wise.
And how about the economic impact of the crisis?
My view is that we may have made a mis-calculation with the lockdowns. We should perhaps have followed the example of Sweden, with less strict lockdown restrictions, enabling businesses to stay open and keep operating.
The rushed opening and huge spend behind these huge Nightingale hospitals – which now lie largely unused – suggests that the maths of the scientists advising the government was largely wrong. Whilst the number of deaths we have had in this country is appalling, the long term economic impact of closing schools and redundancies is going to have a greater impact, not least on the mental well-being for everyone affected. In particular, those affected will be the poorest in society. For example, those children who do not have access to laptops will not be able to learn remotely which will hugely hinder their education and future careers.
What about the socio-environmental impact moving forward?
Well, we all have to be doing a lot more to keep up the progress that has been made.
We’ve seen that the lockdowns have seen huge reductions in pollution levels in major cities. Is this something we can maintain? Unfortunately, I think we will revert back. People like to drive their cars, take transport, etc. One industry that perhaps might be changed permanently is the aviation industry. There will be more awareness around multiple long haul holidays taken each year.
Generally, I think conscious consumption is something that will become less socially acceptable. Say spending £5,000 on a big label handbag, will that be okay? I think people will look at it differently.
The trend of socially responsible investing will continue to grow. This was a strong trend before the crisis, and as more light is shone on the societal differences during this time, I believe that this type of investment will place greater emphasis on making sure that the true value of those key workers is fairly represented.
How do you see the return to office working? Do you think remote working is likely to be a permanent change?
I think there are two points here, firstly that there will certainly be more flexi-working going forward, however we shouldn’t write off the benefits of human contact and interaction in a working environment. After all, we are all social creatures and the positivity of being around your team in person creates good working environments.
To a certain extent, flexi or remote working is absolutely fine to be able to maintain an existing business, but for that business to grow and win new business, it is often harder to do without face-to-face contact.
It will likely be at least six or nine months before we return back to offices completely, but after wide vaccination or herd-immunisation, it will normalise a bit more. However, I do think that flexi and remote working will become more normalised and will play an integral part to the normal working week.
Asia is an area of investment focus for us, in our TM Cerno Pacific portfolio. What can we learn from how the East has dealt with the pandemic, and how they are adjusting to life as we move forward?
China has had the ‘advantage’ of previously dealing with the SARs outbreak so they have been better prepared for the pandemic. Such is the nature of the regime, they are able to control and monitor their citizen’s movements and interactions more effectively. Of course, there is not a political opposition to question their methods, unlike for governments in the West. Citizens are more complicit for reasons that are obvious. That said, we are hugely impressed by the way in which countries like South Korea approached their testing regime, and it is clear that authorities in Hong Kong are taking a precautionary approach for all inbound travellers with immediate virus tests on landing, and electronic tags being adopted to monitor quarantine.
Again, China is the most interesting analogue to watch for consumption habits rebounding as we emerge from our homes. It is clear that not all parts of the economy will rebound quickly. For example, restaurants and public transport are taking time to recover as evidenced by the data. Equally, we have seen home sales recover to near pre-crisis levels. Indeed, Chinese companies were even adapting during the crisis, with the food app delivery companies adopting ‘contactless delivery’ methods. Following on from that, it is evident that the pandemic has given impetus to the trends towards a ‘cashless’ economy. As Satya Nadella (CEO, Microsoft) identified, ‘we’ve seen two year’s worth of digital transformation in two months.’ Technology is a key driver for many of the companies we hold in the TM Cerno Pacific portfolio, with automation, healthcare and the internet becoming key focus areas. The rapid pace of innovation these companies continue to show will further their growth, particularly for those companies where there is no current Western equivalent. It will be a fascinating space to watch in the coming years.