K-shaped recovery

Since it became clear that COVID-19 would lead to a recession, economists have debated the “shape” it might take. With many commentators now predicting a K-shaped recovery, we provide a quick overview of what that might mean for the UK economy.

So what is a K-shaped economic recovery?

In a K-shaped recovery, certain industries and individuals recover while others continue to decline.

With Rishi Sunak sticking two fingers up at creatives with his mantra that they will have to retrain to find work, and the hospitality, travel and events sectors badly affected, it’s not hard to guess which industries are likely to take longer to get back to pre-COVID levels.

K-shaped recovery

In simple terms, the ‘k’ highlights the winners and losers from the last six months of economic activity since COVID arrived on these shores. Those in the upward leg are likely to be professionals in higher-income sectors who have kept their jobs and are able to work from home. The downwards leg represents people who have been furloughed and those who are less well-off and working in industries hardest hit by lockdown and social distancing measures.

However, it also highlights a long term trend of growing inequality in our economy and the apparent knock-on impact we see in our society today.

All the while, we can see the government lurch from COVID announcement to bluffing their way through the Brexit negotiations like it were a game of poker in a Nevada casino. Perhaps the Chancellor would be better served to figure out sustainable structural reforms to revitalise the suffering sectors.

Whilst COVID has brought these topics to the fore, the inequality we see today will only grow further as technology shapes our future more than any other generation since Victorian times.

Recommended reading

Add the climate crisis into the mix and we’re quickly heading towards a very dystopian future. This thinking is captured in some recommended reads:

But I promise it’s not all doom and gloom and we’ll be exploring how things could change for the better over the coming months.

If you’d like to find out more on the K-shaped recovery, here are a few good reads:

If you have any questions about the article or your accounting needs, get in touch on 0203 026 4679 or at hello@iammoose.co.uk.

This article is a general summary only. It should not replace accounting advice tailored to your specific circumstances.

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