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25 March 2021updated 23 Jul 2021 1:47pm

“This crisis has been the polar opposite of the last crisis“: UK Finance’s chair on post-Covid economics

As one of the UK's most high-profile bankers, Robert Wigley witnessed first-hand the long-lasting damage caused by the financial crash.

By Amy Borrett

On a trip to Downing Street as a schoolboy Robert Wigley resolved to make it in the world of finance. It was the start of the golden era for the City of London and his success in a national business competition won him an invite to a reception with Margaret Thatcher. After being introduced to some finance heavyweights by the prime minister Wigley was invited to visit a bank – the formative experience that pushed him into a career in banking.

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After qualifying as an accountant Wigley spent 26 years making his name in finance, first at the investment bank Morgan Grenfell and later at Merrill Lynch, where he became chairman of the bank’s operations across Europe, the Middle East and Africa in 2003. While there he oversaw a number of high-profile deals including Sir Philip Green’s £850m acquisition of now-bankrupt retail group Arcadia and Asda’s sale to Walmart.

Wigley has held a varied range of roles across business and finance over the past decade – from a position on the board of the Bank of England during the collapse of the global financial system to adviser to Boris Johnson during his tenure as mayor of London – that have granted him a front-row seat to the long-lasting damage of the financial crash. 

Now, as the chairman of trade association UK Finance, he has closely observed how the banking industry has supported the economy during the Covid-19 pandemic, in sharp contrast to the role it played during the financial crash in 2008. 

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“In many ways, this crisis has been the polar opposite of the last crisis,” he said. “The roots of the last crisis were actually in the financial system, whereas the banking and finance sector has played a huge role in supporting the real economy during this crisis.”

Wigley’s rosy outlook on the finance sector is the main reason for his optimism about the recovery from the pandemic. A serial entrepreneur, Wigley is also cognisant of the fertile environment for innovation created by the crisis. Many of today’s best-known tech firms – the Facebook-owned WhatsApp, Uber and FitBit – have their origins in the last financial crisis and he sees that “unprecedented” rate of business creation replicated today. 

But while he believes that the economic scarring will be shorter-lived this time around, the pandemic has precipitated a radical upheaval of the UK’s economic foundations in a way that we have not seen for decade. “There are some sectors where irrevocable structural change has been caused by the pandemic,” he said.

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Some of the hardest hit are the young, who have suffered the largest fall in employment, highest rates of furlough and biggest drop in weekly pay. The oldest members of Generation Z are graduating in the middle of a recession and are likely to face a similar hit to their economic prospects as those who entered the workforce in the financial crisis: average earnings for graduates in their late twenties slumped almost 20 per cent between 2008 and 2013, according to the Institute for Fiscal Studies.

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“They watched the effects of the financial crisis on their parents, they have lived through a period when there has never not been a global war on terror, where the climate crisis has come to a climax,” said Wigley. “And now, they are hearing the degree of Covid debt which governments are taking on.”

Covid-19 has also accelerated the impending “crisis of technology”. People in the UK spend an average of 7.2 hours a day looking at a screen, according to one study, rising to 8.8 hours among those aged 18 to 34.

As the father of three adolescent sons, Wigley has seen first-hand how an entire generation has been reshaped by tech and social media. And, despite the critical role technology has played in keeping us connected during the pandemic, he argues that this is not for the better.

“If, pre-Covid, we were already very worried about the link between high screen times, high social media use, high gaming use – particularly by boys – and the rise in anxiety, depression, suicide, self-harm and suicidal ideation, we need to be more worried about it now,” he said, adding that tech and its associated cultural changes partly explain why society is “more polarised than ever”.

Society is waking up to the deleterious impact of technology. Netflix’s documentary The Social Dilemma created ripples by revealing the ways in which Silicon Valley profits from building addiction into the heart of its technology. Organisations such as the Center for Humane Technology, founded by the former Google design ethicist Tristan Harris in 2018, have gained traction in their fight to rip up the existing digital infrastructure.

But policymakers have only just begun to grapple with the challenge of taming Big Tech, which has long resisted state intervention in favour of a liberal model of self-governance. The UK government introduced an Online Harms White Paper at the end of 2020, with limits on harmful content and a code of conduct for platform’s responsibility towards children, which will have a “very significant impact” if it makes it into law, said Wigley. 

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“We are at a tipping point because regulators around the world are waking up to the issues and we just need them to move as rapidly as possible,” he said. “The financial crisis was upon us before we realised that it was coming; this crisis is much more predictable – the key lesson is to wake up sooner.”

“Born Digital: The Story of a Distracted Generation” by Robert Wigley is published by Whitefox (£19.99)