COVID-19 impacts our lives – mainly temporarily
The COVID-19 pandemic has been the most disruptive crisis in living memory for most Europeans. Until 2020 it was just one of many wild cards: An event with low likelihood to happen, but dramatic consequences if it does. This is exactly what we have been experiencing the last two years.
But for how long? In 2021, we discussed the impacts of the pandemic on medium-to long-term developments trends in various studies to the European Commission, European Committee of the Regions and the European Parliament. Reflections from these studies show that the effects of the pandemic are fed by the behavioural changes and restrictions. In fact, the pandemic itself has not so much created new socio-economic and development trends, but slowed down some existing and accelerated some other emerging trends, affecting the maturity of trends, not so much the trends themselves. In short, although the pandemic seems to have substantially changed our lives in the short-term, its effects in the long-run seem to be less.
The pandemic has accelerated trends which were already around in 2019. Examples for such trends are digitalisation, hyperconnectivity and the shift to omnichannel futures, the retreat to the private and cocooning, as well as tendencies towards widened social gaps and increased inequalities between social groups. Just to mention two examples in further detail:
- Accelerated digitalisation: Omnichannel futures. The restrictive measures gave a boost to digitalisation in Europe. This ranges from home working, videoconferencing, online education and e-governance to online shopping and e-entertainment. In some areas, the push towards digital solutions might be temporary and fade with the pandemic. In most areas, however, long anticipated developments have accelerated and changed mainstream behaviour. The pandemic has brought a shift to omnichannel retail, led by digital shopping, which will be further developed and refined in the years to come. Omnichannel approaches are also expected to be used more in education, in particular tertiary education, and entertainment.
- Retreat into the private: Cocooning in the safety shell. Most people in Europe would like to throw off the shackles of lockdowns and social distancing. However, it remains to be seen whether we see a post-pandemic euphoria and catch-up effects for socialising. During the pandemic for many people, their homes became their ‘safety shell’ where pandemic risks are lower. The mental image of the home as a ‘safety shell’ and limited physical contacts may very well leave their mark. People might become more distanced and ‘home-nesting’ might stick as many people prefer to work from home and retrain digital alternatives such as digital entertainment.
In territorial terms these trends are expected to further accelerate urban sprawl as the pandemic fuels aspirations for larger homes and proximity to nature. This might result in both city centres and rural areas becoming more attractive. City centres can offer access to amenities in close proximity, and facilitate neighbourhood life, while green suburban and rural areas can offer more spacious housing and proximity to nature. This will take urban sprawl to a new dimension and risks to increase road transport and car dependency. At the same time, it could be mitigated by remote working, which reduces the need for daily commuting, or accelerated as home working allows people to live further from downtown areas. In any case, the increasing use of online shopping may also increase the transport volume of delivery services.
Temporarily slowed down trends
The pandemic has slowed down some trends, perhaps only for a short period of time. The most obvious trends put on hold by the pandemic concern travelling and tourism and the internationalisation of value chains even within the EU. To just mention two examples:
- Travel coming back soon. The tourism and travel sector has been highly affected by the pandemic and many segments may take a few years to recover to pre-pandemic levels. In the short-term there are fewer tourists, much less business travel. Especially intercontinental tourism will take several years to recover. The aviation sector may need several years to regain previous levels of activity. At the same time a stronger focus on domestic tourism might stay around for a while. Some of these aspects are also discussed in an earlier blog post.
- Repartition of value chains. The pandemic has shown how economies are highly interconnected and how vulnerable complex value chains are. This accentuated discussions about ensuring that essential goods can be produced within the EU. It has also spurred private sector discussions about reorganising value chains and onshoring, reshoring or nearshoring. Among others, value chains for pharmaceuticals, protective medical equipment, microelectronics, autonomous driving, batteries and AI are at the focus of many of these discussions.
For these trends the main question will be how fast and to what degree travel and internationalisation of value chains return to pre-pandemic levels. In the meanwhile destinations with an economy strongly depending on tourist from abroad – especially intercontinental tourist – will have a hard time, as well as areas with an industry strongly depending on the smooth functioning of international value chains. Even in some Nordic countries there are examples of companies that consider to relocate from one Nordic country to an other because the pandemic experience. It seems the lack of coordination between EU neighbouring countries generated uncertainty and local polarisation. This may threaten the resilience of some border communities.
Trends stronger than COVID
Nevertheless, some trends are more decisive for our future than COVID and remain largely unchanged by the pandemic. These include in particular social and environment megatrends. Just take two examples:
- Climate change and loss of biodiversity. Even if the urgency of addressing climate change and the loss of biodiversity has been overtaken by the pandemic, it has not gone. In the best base, the disruptive pandemic could be a chance to shape an economic and societal transition towards carbon neutrality. If we change how we live and what we prioritise, we might also find more effective responses to climate change.
- Ageing and migration. Demographic change with ageing, domestic and intra-European migration, including depopulation, will continue regardless of the pandemic. In the coming decades, the population in Europe is expected to grow before declining, accompanied by ageing and migration. According to Eurostat, the EU is expected to decline from 447.6 million people in 2020 to 441.2 in 2050 and the median age is expected to increase from 43.9 years to 48.2 years. On top of this is global migration. Inflows of migrants to Europe will be countered by an outflow of young and talented people to more thriving and prosperous places elsewhere on the planet.
These and other megatrends will certainly affect local and regional development in Europe, as they play out differently in different types of territories.
Despite the pandemic being a driver for some trends, the tendency to go back to a pre-pandemic ‘normal’ is widely accepted as impossible as the pandemic has left too many scars. Still, Richard Florida and colleagues might be right concluding that in territorial terms the pandemic is not expected to affect macro development patterns and the growing importance of metropolitan areas. Macro-geographical trends of the past 40 years will most likely continue. The pandemic will not end nor soften polarisation and fragmentation between societal groups and places but rather accelerate these trends. Severe inequalities, geographies of discontent and places left behind will be with us for the foreseeable future. The divides between prosperous cities and regions and struggling areas will remain, and possibly even widen.
The main lesson learned is that we need to increase our resilience to be able to cope with shocks and be better prepared for long-term trends and pandemic medium- to long-term impacts, as discussed in an earlier blog post.
The studies on which the above reflections on long-term trends include European Committee of the Regions study on COVID-19 impacts, European Commission study on COVID-19 impacts on tourist regions and European Parliament study on COVID-19 impacts on cohesion (to be published soon).https://steadyhq.com/en/spatialforesight/about