With Christmas around the corner, the country is busy with last minute holiday spending. Officials at the Treasury, however, could be forgiven for feeling rather less festive. With the COVID-19 vaccine being rolled out, attention is turning to the post-pandemic recovery and how the Chancellor should address the UK’s largest peacetime fiscal deficit. In what may prove to be a particularly sober start to 2021, there will be intense scrutiny of public spending as senior stakeholders – including politicians, commentators, NGOs and policy-shapers – examine how the Government plans to kick-start a beleaguered economy whilst providing reassurances regarding the public debt.
To understand opinion formers’ expectations of the Government’s economic priorities and how these could impact the reputations of big businesses, Yonder interviewed politicians, commentators, NGOs and policy-shapers as part of its wider programme of stakeholder research. The findings of these conversations are clear – opinion formers expect the Government to spend its way out of the crisis.
“The Government should be encouraging sensible risks; the economy needs risk-taking and it will require huge investment in certain sectors.”MP
“Their economic priorities should be stimulus and support. It’s a fairly established view that it is less damaging for the economy to err on the side of stimulus.”Business Journalist
Opinion formers’ conclusions are predicated on the following themes:
- The need to address the challenge of rising unemployment (a threat acknowledged by the Chancellor in his review).
“Unemployment causes more social damage and cost in the long-term. The Government need to do what they can to keep as many people in work as possible.”NGO
- The importance of evidencing the Government’s commitment to ‘levelling up’, which has been jeopardised by the pandemic.
“The economic priority should be improving regional growth. The big risk of exiting coronavirus is that economic scarring becomes geographically concentrated. The Government has to find a way of making sure that, as we exit coronavirus and the economy starts to recover, that happens in every part of the UK, and we don’t leave any one region behind.”MP
- The need to evolve the UK economy by supporting the emergence of budding sectors and placing an emphasis on ‘green’ investment.
“We’ve got to decarbonise the economy, that should be our long-term target. If we are going to be mobilising investment in new infrastructure, new projects, that has to be the top priority.”NGO
“We need to support, encourage and enable the innovation that’s happening because of coronavirus. A key area for investment is making sure that every home in the country has digital access, digital connectivity and digital skills. That would transform this country.”NGO
- The requirement to invest in the UK’s skills base, with a particular focus on the younger generation who are considered the demographic most impacted economically by the pandemic.
“People are going to be need to be retrained, reskilled and helped to find new careers, as well as the young people coming up who are looking to start a career.”Business Journalist
The majority view is that the need to address these challenges takes an immediate return to austerity off the table despite mounting pressure on the Treasury’s finances. Instead, stakeholders anticipate – and demand – a longer-term strategy designed to stimulate growth and enable the Government to start delivering on its manifesto commitments.
For the reputations of big businesses, a focus on a swift recovery and ‘levelling up’ represents both an opportunity and a threat. The opportunity lies in clearly articulating how businesses are contributing to the collective national effort to recover from the pandemic. By demonstrating how they are addressing the key challenges of jobs, regional growth, climate and opportunities for young people, corporates will be able to tell stories that resonate with stakeholders and the general public alike. More broadly, this also presents the opportunity to project a wider corporate narrative that evidences how the priorities of business align with the wider priorities of the country.
However, despite this opportunity, failure to get onboard and proactively support the Government’s national recovery effort could risk further exacerbating the trust deficit that has dogged corporate reputations since the financial crisis. Organisations that fail to act risk being perceived as the unacceptable face of business in the eyes of a critical public. This could, in turn, make it much harder for these businesses to cultivate the stakeholder relationships they need to protect their operating environments. Worse, some may suddenly look like attractive targets for an interventionist government.
“This is an enormous national crisis, and the people and businesses that do stuff will be remembered, and the people and businesses that don’t will also be remembered, but not for the reasons they want.”MP
For unprepared organisations, this could present a significant challenge. However, there are practical steps that businesses should follow to mitigate the risk:
- Understand the depth and nuance of different stakeholders’ attitudes to make sense of the wider corporate challenge and define a clear strategic direction
- Develop a comprehensive and differentiated communications strategy that is flexible and appropriate for different stakeholder audiences
- Embed the strategy across the organisation so that activities and culture are aligned with its purpose and values
To avoid a hangover that could last all year, now is the time for businesses to act.