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2021 - The Fog is Lifting
A number of key trends are becoming clearer
In the last few days the fog seems to have lifted on a number of key trends for 2021. This should fundamentally improve the year end organisational planning cycle. Our analysis of these opportunities will provide a small prelude to Surviving’s annual ‘Future Trends’ report which is published in December.
Trend number one - the Covid crisis.
Even though the second wave is raging and a series of new lockdowns have been announced around the world, it looks like good news is on the way. Four vaccine producers have released the preliminary findings of their phase three trials and are edging closer to market release. This means we can better predict the business and societal impact of the virus and its likely course in 2021 and beyond.
Fortunately a number of countries have pre-bought sizable numbers of doses from the suppliers, which has not only sped up the vaccine development process as the risk has in effect been mitigated by government underwriting, but it should also translate into getting vaccines out to people faster as the distribution process has been preplanned.
The four vaccine developers have each announced over 90% effectiveness in trials, which is good for this stage in the process. And this is just the first batch of a large number of international vaccines in development. Expect a rolling series of announcements from other vaccine providers in the coming months.
A handful of vaccines will start to enter distribution from January 2021 and in the first few months of next year we should see front line workers getting immunised alongside higher risk individuals including those with pre-existing conditions and the elderly.
From April countries will start the process of vaccinating the wider population and we predict that by the Autumn of 2021 a large enough number of people will have been vaccinated so, hopefully, next winter will be a great deal easier to manage. Lockdowns and other business interruptions might even become a thing of the past.
Unfortunately winter 2020 will be very tough, with brutal second and third waves crashing around the world. Businesses and households will need to batten down the hatches until next summer - with the consequent effect on economic growth.
Even though vaccine progress is good news and a clear example of public private partnership in action, expect social distancing measures and mask wearing to continue through most of next year. We assume that people will remain weary of travel, crowded spaces and larger events until around 2022 and certainly until we have clear evidence on the ground that the vaccines are working and the world is learning to manage the virus like we have learned to live with the flu.
We should bear in mind that there are a number of healthcare experts and economists predicting that economies will continue to underperform until 2023 as the psychological effect of Covid will alter behaviour and make society more socially reserved, anxious and more fiscally cautious for a number of years to come.
At least the road map to managing Coronavirus has firmed up so leaders and businesses, sector by sector, can start to plan for 2021 and beyond with a little more certainty.
Trend number two - Joe Biden’s America.
In the short term it looks like the existing president will hold off accepting defeat until some of his team’s legal challenges have played out and certainly until each of the states have certified their results by mid December. This will make the Biden transition more challenging but it looks like nothing will stop him becoming the 46th president of the United States on January 20th.
Expect Biden from day one to push for stronger restrictions to battle the pandemic including mask mandates, stricter social distancing and tighter restrictions on gatherings. He is likely to be more supportive of state by state restrictions, including stay at home orders, and is bound to be a more productive and supportive partner for the scientific community. This will have negative economic consequences for a quarter or two. Biden will spend most of 2021 trying to get on top of the pandemic.
We assume that to rebuild much needed trust in the institution of America’s government Biden will be more transparent about the decision making process. This could include airing more key decision making meetings on TV and returning to regular press briefings.
He will be quick out of the gates to get another stimulus package through Congress and will work hard behind the scenes to break the current deadlock between Pelosi and McConnell. He may not get the $3 trillion package the Democrats are seeking but he will not come up with a fistful of mud either. Expect a compromise to be met - possibly around $1.5 to $2 trillion.
Biden has also announced a wider $7 trillion economic plan for his first term in office. How much of this gets voted in could depend on the Georgia senate runoff to be concluded in early January. Expect him and his team to be camped down there for a while.
Biden’s economic recovery plan includes relief for low income workers and small businesses, a jobs recovery plan, infrastructure spending on roads, bridges and ports, R&D dollars to stimulate more hight tech manufacturing in the US, green energy investment, fast broadband for everyone and more investment in schools and colleges.
He has also stated that he will push for government contracts to be awarded solely to companies that have manufacturing facilities in the US. He wants American jobs for American based companies. Biden will increase taxes on the wealthiest individuals and larger businesses while strengthening the unions.
The direction the US takes tends to shape the approaches of a number of other countries and naturally affects industrial and economic development throughout the world.
Biden is not a fan of Brexit and a US and UK trade deal will take a long time to make happen. Possibly not within his first term. Biden will rejoin international bodies and initiatives abandoned by Trump and will try to reinvigorate relationships with key US allies while rallying the world around a US led green revolution. But, Biden will be heavily tied down with internal affairs for the first couple of years in office so his pick for Secretary of State will be important.
Trend number three - the climate crisis.
There has been much talk about Net Zero 2050 but little in the way of concrete plans up until very recently. Some countries in Asia, Europe, Africa and South America are starting to produce the early blueprints for what these plans might look like. China, Japan and South Korea have announced trade ties around green initiatives including technology components for the smart city. The UK has just today announced a ten point climate change plan.
It seems as though the pandemic has woken us up to the urgency of fixing our planet and reducing global warming in a structured and sustainable manner. Politicians have come to realise that the next election cycle will be affected by a more climate sensitive electorate so they are trying to get ahead of this by using the key inter-governmental COP meeting next year to introduce their strategies.
The early plans have revealed some common ground. Switching to renewable energy is a universal starting point. Also expect plans to include smart energy meters and better insulation for homes and public buildings. Expect targets to be set for the switch away from diesel cars to electric vehicles and the ensuing development of other electric products such as bikes, scooters, DIY and garden tools alongside the wider adoption of solar lights and roof tiles.
Country climate plans will also include the shift to smarter, greener cities and towns and a greater focus on natural climate solutions and greener spaces. Expect countries to set targets for reforestation (with the caveat that we might soon run out of trees to plant), rewilding and nature restoration.
We could even start to see a global arms race for renewable energy leadership as countries seize on the opportunity to become the ‘Saudi Arabia of renewable energy’. With Joe Biden in the White House the starting gun should finally go off on the global leadership race for climate solutions. By the end of 2021 expect climate change to sit high on most political agendas.
Southern hemisphere countries seem to be piling more heavily into solar energy while northern countries are likely to adopt more of a blended approach with a little more attention paid to wind energy. France seems to be focusing on nuclear and hydrogen while Spain and Australia have figured out that they can lead on solar and wind - whereas countries such as the UK will rely a little more heavily on wind and particularly offshore wind energy.
Whichever way you look at things, the prospects for 2021 offer a greater level of hope. The Covid-19 vaccine race is bearing fruit, Biden is already providing a much needed boost for democracy and both climate strategies and solutions are gaining traction.
There is still a huge amount to be resolved around future pandemics, global poverty and migration, regional conflicts, social inequity and a small matter called Brexit. But at least businesses and leaders should be able to plan better in a somewhat more stable world with fewer surprises and roadblocks.
Last of all, the international community might discover some common ground as we start on the long road to exiting the pandemic and come together to solve the biggest crisis of our time: the climate crisis.
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