July 29, 2020
Getting out and about to visit people and businesses across the UK is one of the most enjoyable parts of my job as the Bank of England’s chief economist. It is also one of the most informative.
While we rely heavily on data to inform our understanding of the economy, that is no substitute for talking to those working in, and running, businesses when it comes to understanding how the economy is working.
And never has that been more true than right now, with businesses and workers being buffeted
by the COVID-19 crisis.
The Bank of England’s agents in the North East, Mauricio Armellini and Gareth Harrison, gather this intelligence on a daily basis, relaying it back to the Bank’s Head Office in London.
I try to visit the Bank’s 12 agencies across the UK as much as possible, alongside other members of the Bank’s Monetary Policy Committee (MPC).
For me, a visit to the North East Agency is very much a home from home. I was born there, still have family there and retain (through thick and, sigh, thin) my lifelong support for Sunderland AFC.
The terrible coronavirus outbreak meant I was unable to go ahead with my planned visit to the region in May, where I had hoped to hear from a range of businesses and to lead a Community Forum event in Byker.
Fortunately, technology rode to the rescue and I instead conducted a ‘virtual regional visit’ from my desk at home.
While nothing is like the real thing, one upside of doing visits in virtual form is that we can convene contacts from right across the region including Newcastle, Sunderland, Ashington and Redcar, all places I’ve enjoyed visiting over recent years.
During my virtual visits, I held one-to-one discussions with businesses operating in the recruitment and automotive sectors, before hosting two roundtables.
The mood at the roundtables could not have been more different, underlining the very different lived experience facing people.
I had a surprisingly – and encouragingly – upbeat discussion with representatives from the housing industry, from the private and social sectors and some local mortgage lenders. The housing market had enjoyed a strong start to the year before closing overnight at the start of lockdown.
Since reopening their doors in May, estate agents had seen a rapid rebound in activity, probably reflecting pent-up demand from previous months. While the outlook is inevitably uncertain, given the possibility of further job losses, most felt relatively upbeat about the outlook. So far, then, so good.
My optimism was tempered at the second roundtable. This was one of our regular Community Forum events, bringing together the charity sector and community leaders. Two big themes emerged.
First, is that there’s been a huge hit to the financial health of charities caused by the
COVID-19 crisis. The level of corporate and public donations has fallen sharply. And this hit has been especially acute for charities who relied on their high street shops for trading income. It’s left many charities concerned about their long-run viability.
Second, at the same time, their finances are being stretched, many charities are facing an unprecedented demand for their services. This is, in part, due to a combination of rising unemployment and falling household incomes. People previously ‘just about managing’ have suddenly found themselves struggling, increasingly reliant on food banks.
Problems of mental health and loneliness have also risen. One charity mentioned a client who hadn’t had a conversation since March. And many are now feeling marginalised and distanced from their community as a result of the COVID-19 crisis.
These are enormous challenges, financially and societally, many of which the Bank of England can’t itself solve. But learning about these challenges is crucial for us when understanding the toll this crisis is taking on peoples’ finance and the different personal experiences it is generating.
As many people have said, this is a critical time for communities and regions to collaborate and pull together – and, encouragingly, there is evidence of just that already happening in areas such as youth employment and access to basic technology and broadband. Both of these have a legitimate claim to be called a fundamental human right.
Overall, I sense that the North East region is tackling COVID-19 with a determination and togetherness I recognise – and which, longer- term, will serve it well. From a community boxing club in Redcar to the shop floor of an automotive supply chain manufacturer, those qualities will shine through. At a formidably difficult time for our communities and our country, that gives grounds for optimism.