Phase 2 and beyond: the paradigm shift ahead

What paradigm awaits us in the post-Covid-19 era? Each of us will have to become a start-up, we will all be forced to reinvent ourselves

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Phase 2

by Alan Friedman |

Phase 2 has arrived. The partial reopening of the Italian economy, like that which is taking place in other European countries and in the United States, is full of risks and opportunities. It is fraught with dangers and also presents several reasons for confusion.

While politicians and experts parade around on talk shows, performing non-stop in the television circus and contradicting themselves often, too often; while the governors of some regions bicker with Rome and also with their counterparts in the north and south (sometimes reaching less than edifying levels); while millions of Italians complain about the lack of clear, linear rules that are set out according to an understandable logic; while small and medium-sized enterprises are forced to face long delays in wresting desperately needed liquidity from the tentacles of bureaucracy; while VAT holders, the self-employed and employees languish while waiting for a redundancy fund or an emergency income... we cannot limit ourselves to thinking about the present. We cannot stop at the here and now.

Beyond Phase 2

It is time to look beyond Phase 2 and try to understand the changes that lie ahead, which will be gigantic and epochal. Our way of life will change. The whole world will change. Nothing will be the same after Covid-19. We will not return to the "Old Normal". There will be a "New Normal", in the economy, in work, in sports, in entertainment, in fashion, in our everyday lives, in the way we go to restaurants, go shopping, use technology, protect the environment, develop the green economy, and much, much more.

Perhaps, we will even change our approach to basic human values. And that would be a good thing. Will there be more social inequality? Or will we move into an era of greater equity? We do not know. Will the global recession, now certain, degenerate into something worse? It is possible, but we hope not. Will the gash in Italy's industrial fabric be so deep as to leave structural damage? Probably, but how serious will it be? We do not know. How many small businesses will not be able to resist? How many will go bankrupt? Probably more than we think. What about our children? How will we educate them? With social distancing, of course, but how exactly? We have no idea. Will universities change to accommodate the need to teach a whole new range of knowledge? Perhaps they will. Will political extremism and populism return to plague us even after the Coronavirus crisis is over? Perhaps.

A Phase 2 for the economy and society

Many, many questions, few clear answers. But let me try, with great humility, to offer some thoughts. To begin with: yes, The economic damage will be profound. And the recovery will be slow. We are facing a long period, between 18 and 24 months at least, before we can even hope to approach a normal, functioning economy. After the collapse of Italian GDP, which could be around 10% in 2020, the recovery in 2021, even if it were to reach five percentage points, will probably not be able to recover even half of what we are losing today.

Themoment of truth will come in 2022, when we will see whether we will return to pre-Coronavirus gross domestic product in two or three years, or whether we will see a repeat of 2008-2009, when it took us a full decade to recover to 2007 levels. If the second wave of Covid-19 were to hit in the autumn of 2020 or the winter of 2020-2021, i.e. before a vaccine can be tested, manufactured and widely distributed, the risk would be that we would be faced with a W-shaped economic cycle, or, as economists call it, a "Double Dip" recession.

As for the rules on crowds, which affect so many aspects of social life, let me quote Jan Dalley of the Financial Times: "Even if the restrictions were relaxed, even if your favourite theatre or music festival were to open tomorrow, would you really go? How long do you think it will be before you feel like diving into a crowded cinema, dancing in the huddle of a nightclub, standing in line at a bar for a sandwich, at the risk of having a stranger cough in your face?"

Some of the changes caused by Covid-19 will become permanent, changing the face of society. Smart working, teleworking from home: it will probably not end along with the crisis, at least for some sectors. The most important and traditional trade fairs, which allowed our companies to showcase the best of Made in Italy, from fashion to components, may not be what they used to be. Not entirely, at least.

Digital platforms, virtual showrooms and e-commerce will become an even more 'normal' part of exports. Italian fashion and design will perhaps be influenced by a new aesthetic sensibility, and sustainability will be even more important than before, just as the ostentation of luxury goods will perhaps be less brazen. In other words, it is possible that in several areas we will see profound changes, which we should accept, willingly or unwillingly, because it will not be possible to resume old habits until a vaccine is not only produced, but also distributed to at least 70/80% of the population. And this will not happen before mid or late 2021; perhaps we will even have to wait until 2022.

Risks and opportunities

In the next 18 to 24 months, Italy, like the whole of the West, will be forced to make a leap forward that would normally take ten or twenty years, in terms of the economy, the organisation of society and the use of technology. We will soon witness a rearrangement of the tectonic plates on which Western society rests. For better or for worse.

The only certainty is that there will be a paradigm shift. It is inevitable. And in some respects, yes, it may bring more meritocracy. If we are forced to reinvent ourselves - in business, in our own lives, in our worldview - then perhaps each of us will have to become a start-up. And this opens the door to great risks, but also to great opportunities. great opportunities.


About Alan Friedman

Alan FriedmanA journalist, television host, writer and economics expert, he has been a correspondent for the International Herald Tribune and a columnist for the Wall Street Journal. He began his career as an aide to President Carter's administration, created and hosted several RAI programmes, worked on the creation and launch of Rainews24 and in 2003 collaborated with Rupert Murdoch on the creation of SkyTG 24. During his career he worked as a journalist at the Financial Times in London, Alan Friedman has been awarded four times with the British Press Award. One of his most famous scoops was the discovery of the Iraq-gate scandal, the sale of arms to Saddam Hussein thanks to illicit financing carried out also through BNL, which involved the CIA. He is the author of nine best-selling books, including his latest effort "'This is not Italy' published by Newton Compton.

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