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2020 in review: A country in turmoil

Philip Fisher reflects on the state of the nation and the profession as we begin a New Year.

29th Dec 2020
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Nobody under 90 who has spent the majority of their life on the UK mainland will have seen anything to compare with the events of 2020.

It is hard to believe that any reader will not be delighted to see the back of this benighted year in which friends, family and clients have been blighted and sadly, in some cases, killed by a pandemic of which we knew nothing on New Year’s Day.

Excepting those in Northern Ireland, we have been the lucky generation. We haven’t witnessed even the smallest of wars other than in the distance, while technology has improved our lives and material prosperity has become the norm, particularly for affluent accountants.

At the beginning of 2020, some might have been fearful about the economic consequences of the European departure but otherwise, everything in the garden seemed rosy.

Instead, our lives have been changed irrevocably and unthinkably. Generally this has been for the worse, but not always.

The devastating impact of the virus

This article comes from the perspective of an accountant who has spent the last nine months suffering from an admittedly mild but still pernicious version of Covid. Make no mistake: the stories about the virus only having a devastating impact on older people are fallacious. This has been no fun and it is unclear when, or if, it will become no more than a memory.

It is easy to identify the downsides that have overtaken us all over the last year. People have died, businesses have collapsed, while many others are currently on the brink. Staff will have been furloughed and then dispensed with, while many businesses particularly in the leisure and hospitality sectors are still incurring significant costs with limited or even zero income.

It is worth repeating that, for the most part, accountants have been cocooned from the worst of the ravages, able to work from home and make decent profits, if not always at the same levels as in past years.

Unexpected benefits of the pandemic

However, the pandemic has also generated some unexpected long-term benefits. We have had to make the most of technology while, at the same time, discovering that paying vast amounts of money for office space is longer be a necessity. Either we can work exclusively from home premises, possibly hiring meeting rooms occasionally or, at worst, use much smaller offices that staff and partners might typically only attend on a couple of days a week.

Working practices have also changed, sometimes almost invisibly but generally for the better. This means that our businesses should be slicker and well set for what should eventually be a hopeful future.

Looking forward, the promise of a whole suite of vaccines that together provide a degree of protection must offer great hope. Quite how well and how quickly this will pan out remains to be seen.

Last-minute Brexit deal

The European situation has also been clarified. Predictably, the UK waited until the last minute but then agreed to a deal that was inevitable throughout, despite the bluster. Whether it is a good deal we will discover in in the fullness of time.

At first glance, it would generally not have a major impact on our industry since services are not covered, although recruiting members of staff from overseas could be embroiled in red tape, while auditors with qualifications from EU countries will no longer be able to ply their trade in the UK and vice versa.

The unknowns of 2021

The biggest unknown as we look forward to the New Year is the hit to our own personal economies. Will even more clients go to the wall before the vaccine takes effect? If they don’t, they could still be a problem since many may not be able or willing to afford good quality accountancy services.

We must also expect there to be downward pressure on fee levels, as clients point out that we are no longer paying for expensive premises and in other ways our cost bases should be lower.

Looking further ahead, the country has borrowed itself into a big black hole and, at some point, it will need to pay the bills. Therefore, we should anticipate tax rises ahead although these may not arrive in 2021.

All in all, we are replacing a year of great uncertainty with a year of great uncertainty.

Happy New Year.

Replies (2)

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By Ginger Tom
30th Dec 2020 15:13

You forgot to mention that UK accountancy qualifications will no longer be recognised or accepted in the EU.

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Hallerud at Easter
By DJKL
03rd Jan 2021 12:09

Philip

Happy New Year.

I really need to take issue with one part,

"However, the pandemic has also generated some unexpected long-term benefits. We have had to make the most of technology while, at the same time, discovering that paying vast amounts of money for office space is longer be a necessity."

How on earth is this a long term benefit for a property company.

More seriously in the final run up to Christmas (last couple of weeks before the break) there seemed to be more tenant wobbles than earlier in 2020, well certainly within our rent roll, I think some of the business closures due to Covid, outwith the more obvious leisure sector ones, are now going to be mounting up, we will start to find out tomorrow and on Tuesday (given in theory tomorrow is a holiday up here) but a few e mails in December started to give forewarning regarding the likely direction of travel, in fact I expect by the end of this week I will be marketing 30% of one office development we own that previously was 100% let.

Regards

DJKL

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