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Pandemic brings lasting changes to city centres

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Société Générale shuts branches and increases focus on online banking

Today’s news that France’s Société Générale will shut 600 branches as part of a cost-cutting drive is just the latest example of how the pandemic is not only accelerating changes in the way we do business but also bringing major changes to our built environments. 

The move follows similar decisions across Europe from the likes of ABN Amro, Deutsche Bank, HSBC and Svenska Handelsbanken. 

As with so many other sectors, the shift to online banking did not start with the public health crisis but has certainly been turbocharged by it.

Retail has been the most obvious example. Today we report a trebling of losses at Ted Baker and news that even the Queen’s coffers — Her Majesty is a big commercial landlord via the Crown Estate — have been hit by the enforced closures of stores and restaurants. Online beauty retailer The Hut Group, meanwhile, has increased its full-year sales forecasts for the second time since September as digital sales rocket. 

But beyond the distress of individual retailers, as our Big Read explains, the crisis has led to a wider discussion on the very purpose of city centres and how they might look in the future. The crisis is particularly acute in the UK where town planning for so long was entwined with the expansion of big retail at the expense of small businesses. Now the industry is in crisis, retail landlords can either slash rents in search of new tenants or repurpose stores for other uses. 

Office space is another area ripe for a rethink, argues columnist Pilita Clark, not least because surveys indicate staff want to keep working at home — at least for part of the week — once the pandemic is over.

Remodelling of workspaces to do away with the distraction of open-plan design, adding more meeting rooms and providing more privacy for workers could actually turn the office into a vastly better version of what it was before Covid-19, she writes.

Markets

The European Central Bank on Thursday is expected to increase its €1.35tn emergency asset purchase programme by another €500bn. Investors are betting the bank will do what it takes to keep EU borrowing costs low, writes capital markets correspondent Tommy Stubbington. An EU summit on Thursday and Friday — as well as contemplating the final outcome of Brexit talks — will continue the debate about the bloc’s coronavirus recovery fund.

Line chart of 10-year yield spreads versus Germany (percentage points) showing shrinking spreads in the eurozone

Consultancy PwC says the pandemic will lead to structural changes in the asset management industry, as infrastructure, private markets and a business focus on sustainability lead to new revenues. If coronavirus vaccination triggers a rapid economic recovery, assets overseen by investment managers could increase 5.6 per cent a year to hit $147.4tn by the end of 2025.

Absolute return funds — those that promise results in all circumstances — have performed particularly badly during the crisis. Investors’ frustration that the all-weather funds failed to shield them from the pandemic shock could hasten the end of the products, once one of the asset management industry’s hotspots.

Business

The strength of digital media has helped the global advertising market overcome the serious downturn in traditional marketing and could potentially deliver a rebound of 6.2 per cent in 2021. There are still casualties from the pandemic: Japan’s Dentsu — the world’s fifth-largest ad company and suffering greatly from the postponement of the Tokyo Olympics — is cutting 6,000 of its overseas jobs.

Airbnb’s decision to go public — trading begins in the accommodation booking company’s shares on Thursday — gives us an interesting opportunity to gauge investor thinking on the future of a travel industry ravaged by the pandemic. At the more traditional end of the sector, Hyatt Hotels today announced plans to expand in Europe, hoping that post-vaccine demand can compensate for its losses during the crisis.

Fintech groups in the Middle East have benefited from the drive towards online financial services caused by the pandemic. From a low base, the sector is growing 30 per cent a year in a region where the young are swift to adopt new technologies but where millions have been overlooked by banks and wealth managers. Read more in our special report: The future of telecommunications

Global economy

China’s export success, supported by demand for pandemic-related products such as personal protective equipment and gear for working at home, continued with a 21 per cent jump in November compared with last year, pushing the country’s trade surplus to record levels. Things are less rosy in Hong Kong where its top financial official said the pandemic had “derailed the city’s economy”.

Forecast-beating industrial production data in Germany — including an almost 10 per cent jump in carmaking — raised hopes that Europe’s largest economy could avoid a double-dip recession.

A decision on a new US stimulus bill is inching closer. The current proposal includes $288bn in small business aid, $180bn in unemployment benefits, $160bn for hard-hit local governments and help for stricken business sectors such as airlines. President-elect Joe Biden today unveiled his team to tackle the pandemic.

Have your say

Coronavirus vaccines mean light at the end of the tunnel at last. But there’s a long way to go before the world can say goodbye to pandemic disruptions. Can governments roll out vaccine programmes swiftly, efficiently and fairly? And who should have priority? Please share your views with us — email us at [email protected]. Thanks

AdamC comments on Here’s what the office of 2021 should look like:

Amen on the meeting rooms point from me. Office designers seem to chronically underestimate the need for private meeting rooms and overestimate the need for trendy, open collaboration-type spaces, which seem to sit largely unused.

It is particularly hard for people who have people management responsibilities, or who work in sensitive functions like HR or finance. These workers cannot discuss much of their work in a café-style booth next to the lunchroom or wherever!

The essentials

Business education correspondent Jonathan Moules looks at how family businesses have coped with the pandemic and offers some tips from experts on how they can balance short-term pressures against long-term opportunities.

The UK’s NHS will administer the first doses of its Pfizer/BioNTech vaccine on Tuesday. One in three UK adults will not accept a vaccine, a poll has found.

Final thought

From European Commission president Ursula von der Leyen to Wuhan diarist Fang Fang, the FT’s Women of 2020 series celebrates the politicians, scientists, activists and authors who have inspired us during a difficult year.

We would really like to hear from you. Please send your reactions or suggestions to [email protected]. Thanks