Many of us will be watching Sunday's daily briefing, eager to see what the anticipated easing of the current lockdown looks like. Some businesses will be hoping that a relaxation in restrictions will be the first step towards a return to normality, including those in the retail and hospitality sectors which have been particularly hit.
However, the Bank of England has this morning warned that the economy could contract by 14% this year, with the housing market already having come to a standstill and consumer spending having dropped by 30% in recent weeks.
Although some businesses will have survived the initial economic shock, we will have to see what the impact of any removal or reduction in the scope of the various government backed initiatives is. There is already speculation about the extent and duration of the furlough scheme, and it's unlikely that financial support and payment deferral arrangements will be available indefinitely.
Many organisations have been taking emergency steps to manage their cashflow and we will have to see whether a longer term trend towards greater cash retention and liquidity develops and what this might mean going forwards
Many business are undertaking strategic reviews to see where cost savings can be made, or where their position might otherwise be improved. It's important that broader contractual arrangements are considered as part of this exercise, and many of our clients will be considering how they might restructure existing arrangements.
We might find that an unintended consequence of the pandemic, is that it has highlighted the risk of being too reliant on just one commercial counterparty. It will be interesting to see which of our clients are able to take advantage of the current economic climate by renegotiating fees in their supply agreements, or agreeing more favourable contractual terms.
"Not all of the economic activity comes back. There's quite a sharp recovery. But we've also factored that people will be cautious of their own choice. They don't re-engage fully, and so its really only until next summer that activity comes fully back"