While coronavirus rages on, a sustained economic recovery is impossible

Individual businesses and sectors are having to get creative, and in many ways they predicted some of the issues in advance and have adapted, writes Hamish McRae

Paradoxically, the response of companies to the crisis is becoming clearer than the shape of the crisis itself (Getty)

California orders bars in virus hotspots to shut. Leicester, unlike the rest of England, has to delay the reopening of its pubs and restaurants. North Rhine-Westphalia, Germany’s most populous state, is shutting some of its bars, cinemas and gyms. Victoria, Australia, is imposing a four-week lockdown. And the World Health Organisation warns that the worst of the pandemic “is yet to come”.

That is just a random snapshot of the news of the past two or three days. There are many other examples of outbreaks that tell us that, while the global economy may have hit bottom in the second quarter of the year, Covid-19 will continue its destructive path for a while yet. While it does so, a sustained global economic recovery is impossible. Economists can make guesses as to the profile of growth in the months ahead but the uncertainties are huge – and companies have to live with that.

Paradoxically the response of companies to the crisis is becoming clearer than the shape of the crisis itself. At the risk of overgeneralising, there seem to be three main elements to this. They are shortening supply chains, planning for much more variable demand and building up more robust balance sheets. The net result will be a higher-cost but more resilient world economy. A word about each.