A leading economist has forecast a V-shaped recovery from the recession caused by Covid-19, but dismissed suggestions of a post‑crisis boom for travel.
Roger Bootle, chairman of London-based Capital Economics, told a Hospitality Tomorrow online conference: “The best we can hope is that we get back to where we were.”
He expressed optimism about the UK’s ability to manage the debt resulting from measures to support business and furloughed workers but forecast: “The EU won’t emerge unscathed.” Bootle also said: “I’m more optimistic about leisure travel than business travel.”
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He told the conference: “There has been a dramatic drop in GDP – the worst performance in a short period since the Great Depression. But we’ll get a sharp recovery, a V-shaped recovery. What happens after that? Some people think it will be better than it was. I don’t. The best is that we get back to where we were.”
Bootle argued: “We’ve seen a massive increase in debt. How do we deal with it? Some argue slashing public expenditure and raising taxes would be good [or] inflation would be good. I don’t. We should put up with the debt and try to get growth up.”
He said consumer spending would inevitably be weaker, noting: “Some people are in desperate straits. When the restrictions come off, I anticipate a surge in demand for hospitality and travel, but it won’t be sustained because people have suffered a big dent to their finances.
“It could lead to a second downturn. But we should see demand return in the medium term.”
However, Bootle suggested: “There is a big question mark over business travel. People have learnt to have virtual meetings.”
Bootle insisted: “Attitudes to China in the West won’t be the same [and] there will be major effects in Europe. Borders were closed. People looked to their national governments. The EU was able to do nothing. The blow to the Italian economy will be huge. It will increase the strains in the eurozone and on the EU.”
