Stephanie Kelly  0:06  

Hi, welcome to macro bites podcast from abrdn, that breaks down, economics, politics and policy to help investors understand the opportunities and challenges in this macro environment. My name is Stephanie Kelly. And today I'm joined by my co-host, Paul Diggle and Luke Bartholomew to talk about their research into the long term effects of COVID 19. So thanks so much, guys for joining. Thanks, Steph. So I thought I'd kick off before asking you about your own research, I thought we get a little personal and I'd ask you, what are the biggest changes you think - the long term changes that COVID is likely to have on your life? And maybe Luke, I'll kick off with you.

Luke Bartholomew  0:44  

I guess the obvious one is hybrid working, spending more time working from home. The other, I guess is discovering the joys is scouring the depths of Amazon Prime and Netflix - there are some great shows out there. So yeah, maybe that.

Stephanie Kelly  1:03  

Paul?

Paul  Diggle 1:04  

Well, those two things are true for me as well. But perhaps to add a third one, I think, actually a quite a positive discovery I've made in lockdown is getting home meal kits delivered and restaurant quality meals that you know, you do a bit of preparation yourself. That's something that's going to stick for me beyond lockdown and well beyond the pandemic.

Stephanie Kelly  1:24  

Nice, very, very nice. good choices, guys. There are some positive signals, I think in there for some kinds of companies, maybe bad news for properties that host restaurants if everyone goes the way Paul is. Well, maybe let's kick off that in terms of the research you have done. So maybe a really simple question to start, or maybe it's not that simple. Paul, why does permanent damage to the economy matter?

Paul  Diggle 1:48  

Yeah, thanks, Steph. So Luke and I did this research paper on the size of permanent economic scarring from COVID, will there be any, obviously there was lows after the financial crisis, or will there be no lasting impact on the economy at all? And COVID is more like a natural disaster in that respect, which you don't really see them in the data years later. And that question matters a lot for a number of reasons. I think I mean, fundamentally, because if future output is lower than it would otherwise have been absent the crisis, that affects all of our living standards, you know, our welfare, in economic terms, is just going to be lower if we don't sort of claw back this economic hit more narrowly, perhaps from the perspective of financial markets because if output is low, if growth is lower than a lot of investment markets, particularly those that grow in line with the economy, risk assets do less well, as well. And perhaps thirdly, because history tells us that long term economic scarring can be really profound. You know, the GFC is a great example. If you look at the eurozone economy, post the financial crisis, and then the eurozone sovereign debt crisis, it experienced a huge level of long term economic scarring, both the growth rate was lowered, and the level of output never sort of regained its pre crisis path. So on the eve of the pandemic, the eurozone economy was perhaps 25%, smaller than it would have been had it followed its pre global financial crisis path. So that economic scarring is enormous, profound and really, will have changed the way the lives of people living in that economy.

Stephanie Kelly  3:41  

Wow. I think that's, I mean, it's a great point but it's interesting that you mentioned the GFC, because the natural question is, you know, in some ways COVID feels so different to other crises we faced. So I wonder, to what extent is history a useful guide when it comes to these kinds of issues? And, you know, or can we look at, you know, the history of like, the Spanish flu, for example, are they useful?

Paul Diggle  4:05  

Yeah, that's a great question. I think there are, there are really two types of historical precedent, what we might want to draw on. One is financial crises of the past. The other one is pandemics of the past. And I mean, the bottom line conclusion we come to in the piece is actually neither a great analogue to what's going on now. And you need to think specifically about the dynamics of the COVID shock. So financial crises to start with, I mean, there's a huge academic literature on the specialness of financial crises in terms of their lasting impact on the economy and on economic output. And that literature obviously largely sprung up after the global financial crisis, but there was work on it before then. And they generally find financial crises in particular leave these big economic scars. And the COVID crisis was not primarily a financial crisis. I mean, it could have morphed into one at points of acute stress early on, in sort of the spring of 2020, but policy action, the enormous efforts in liquidity support of central banks, the fiscal policy measures of governments generally averted that. So you can't really directly read across from that big literature on financial crises. But as I'm sure we'll go on to talk about things that happened during financial crises that caused the damage, some of those things happened during the COVID shock as well. So you can sort of, you can draw a little bit on that picture. And then in terms of, of past pandemics, so I don't think we can really draw on quote "the small scale" recent pandemics like swine flu, really the comparisons to the great historical pandemics. So there's the Hong Kong flu in 1968, the Asian flu 1957, the Spanish Flu in 1918. But then you can go even further back, you can look at 19th century cholera pandemics, 16th, and 17th century plague epidemics, even the 14th century black death. And we did that in our research. Amazingly, you can actually get economic data from all the way back to the 14th century, from this brilliant Bank of England data set. I mean, it obviously comes with huge caveats. Yeah, they've done a lot of work inferring the level of economic output GDP in the 14th century from sort of historical record. So it goes without saying, there are these giant caveats. But you can pick out lessons here, all the way back from then. And to note some of those big 20th century pandemics. And in general, they have a huge negative hit on GDP, we estimated that the typical hit actually from these big big pandemics was 8% of the level of GDP, and it's never really regained afterwards. So that is the last economic scar. But there are some interesting things. GDP per capita, output per person actually went up during a lot of these historical pandemics, especially during the Black Death. And that was because of this massive reduction in the labour force, the number of deaths that occurred meant that the capital intensity of surviving labour was much higher. So people's productivity actually went up during some of those past pandemics. And in the case of the Black Death, because that had a lot of historical study that was behind all sorts of important social changes, like the peasants revolt and the rise in wages in England at the time, for example. I think the bottom line here though, is what can we actually learn from all those periods? Well, not an enormous amount, because it's not really, if for all the tragedy of the number of deaths during COVID-19, which have been truly awful, it's actually not on the scale of some of those enormous pandemics of the past, it's not really labour destruction, that's going to do the work this time around in terms of its negative economic impact on the economy is obviously vastly different. This isn't an agrarian economy, it's a complex, modern, integrated global economy. So I think the point there is you have to think through what was special this time around, you can't just read across from financial crises and pandemics of the past. 

Stephanie Kelly  8:17  

So that's a really useful point, I think it kind of gets at that idea, people kind of say economists are always fighting the previous crisis, you know, there's always a sense of, we're really good at diagnosing what the past crisis was and what it meant. So maybe Luke, I'll bring you in here. When you think about where those sources of damage might be this time around, what are the kinds of things that you would point to?

Luke Bartholomew  8:36  

Well, I think a useful place to start at a slightly more abstract level is just to point out that when we're talking about scarring, what we have in mind is damage to the supply side of the economy. So the economy's long run productive potential, its ability to produce goods and so ultimately, scarring there means there's been some deterioration in the quantity or quality of labour and capital, or how good we are at combining those inputs to make output for want of a better word, are productivity or efficiency. And so you hear a lot of talk at the moment about that being sort of supply chain bottlenecks damage to the supply side, this causing some price pressure, this is not what we have in mind when we're talking about scarring and supply, side damage. Those are much more transitory factors, we're looking at things that change the fundamentals of how much an economy can produce over the long run. And so you can think, I think, broadly in two ways about how that damage could occur. One sort of directly to those impacts direct supply side damage, and the second is sort of weakness on the demand side. So when you get a recession, demand side weakness, that that weakness ends up metastasizing in some way and turns into damage to the supply side. And that's an idea that Economists have become more and more interested in recently ways in which recessions, downturn, which normally, we just think of demand side problems can turn into supply side problems. So under those two broad rubrics, we identify, I think, probably four main channels through which we think long term scarring could occur. So the first is by damage to the labour market, how well suited people are to the jobs, they're in how many people there are to work and the kind of skills that they bring to bear in that work. Second, damage to corporate structure sometimes sort of talked about zombification and firms in general, becoming less efficient for various reasons. Third, in belief scarring, so people's perceptions of the future and the kind of plans that they want to make, a change in some way that permanently affects the level of activity, and forth in policy error. So policymakers do certain things which make the damage worse, or indeed fail to do things that would make it better.

Stephanie Kelly  11:04  

So why don't we then dig into a couple of those. And one thing I was really struck by when I was reading your research, is the idea around zombification of companies. And this is something that investors talk about, you know, from time to time, around risks that come with policy support, or not enough policy support. So I'm interested, how do you see the kind of overall picture of zombification of companies coming about as a result of this crisis?

Luke Bartholomew  11:33  

Yeah, I mean, it's, it's a bit of a buzzword this idea of zombification. And it's quite hard to sometimes pin down exactly what people mean. But the kind of idea that we have in mind is that a big shock comes along, interest rates tend to decrease, various forms of forbearance are extended to companies and this means that a certain kind of company that isn't hugely profitable, doesn't invest a huge amount in its future growth, is able to survive when it otherwise wouldn't be because its debt servicing costs are much lower. And there is evidence to suggest that those kind of firms defined in that way seem to have been in secular increase since the 1980s. And specifically, there seems to be sort of a ratchet effect around downturn. So a downturn comes and you get, as I say, this fall interest rate this forbearance, and you get a shooting up in zombie companies to find this way. And then when the recovery comes, you never see this decline, they tend to sort of continue to lumber about I suppose to extend this on the metaphor slightly.that So certain kinds of firms don't make as much profit as they otherwise would have done, don't invest as much. And so there are called these congestion effects from these zombies sticking around, which overall makes the economy less efficient. And you might worry that we've sort of had the conditions that create that during COVID, because again, interest rates have fallen sharply across the board. And there's been a huge amount of forbearance both by banks, but also governments in terms of taxes when they need to be paid, a debt servicing when it needs to occur, rent, etc. So a lot of companies that might have gone out of business because they were inefficient, and the normal scheme of business would have would have seen them fall have actually managed to survive during the pandemic due to all of this sort of forbearance. And that's the sense in which there could be more zombies hanging around, and sort of weighing on productivity that way, and I suppose the places where you'd be especially worried about that kind of dynamic would be those parts of the world where maybe the banking system is somewhat less efficient. So there's less need for banks to sort of compete and ensure that who they're lending to, are the most efficient kinds of companies instead, there's sort of a lot of something called extend and pretend they just continue to sort of roll over loans about going out and finding the more efficient companies are more generally that product and labour markets are just less contestable, that there's less competition around firms so it's easier for these quote unquote zombies to survive. So perhaps the likes of Japan or Europe, you might be more worried that these effects are setting and I think that sort of points or what is actually quite an important finding of our work are that these channels are bigger or smaller in different parts of the world, depending on the kind of institutions that are in place in those countries.

Stephanie Kelly  14:55  

So that's a really interesting question.  Following on from that, I mean is that is the risk then that you have these zombie firms greater than the risk that we've lost good firms or that the nature of consumption changes so much through the pandemic such that  what were once upon a time kind of non zombie firms or, you know, firms with, with huge capacity for for growth in the future, do you think that has shifted such that we've lost good firms? Or is it you know, I guess, where do you lie on it?

Luke Bartholomew  15:25  

So my sense is the failure to provide a lot of these measures that I talked about the cutting interest rates, the forbearance, had that not be done, yes, we would have avoided some zombification. But there would have been an awful lot of good firms that would have gone under as well. And that would have been a lot worse for long run productivity. So in a counterfactual world where there's no policy, or there's no policy response, I suspect the productivity outcomes would be even worse. But that isn't to say that there wouldn't be some damage to the structure done in this way. As I said, there are those markets where you might particularly worry about this, because they are less competitive in general. And I suppose more generally, it is the case that the more you think that the pandemic is going to bring about large structural changes in the way in which we conduct business and consume more hybrid working and Netflix and Amazon watching perhaps as we talked about at the start, the more of that the more the economy fundamentally has to change, then perhaps the more you do worry about zombification, because it makes it harder for the corporate structure to adjust to those kinds of changes for capital and workers to be reallocated to where they need to be.

Stephanie Kelly  16:49  

So given what we've just talked about with corporates, a natural follow on I think, for labour markets and how they might have fundamentally shifted and what did your research find when it comes to the long term effects on labour markets?

Luke Bartholomew  17:02  

So labour markets are one of these classic cases where demand side weakness, recessions, periods of unemployment can turn into sustained damage to the productive potential of the economy. Economists have known about this for quite a long time, we call it hysteresis. Sometimes, and this is the idea that, you know, you shouldn't necessarily expect a recession to fundamentally change the way in which people participate in the labour market and what pins down full employment. But it seems to and some of the reasons for that might be that during periods of high unemployment, workers sort of lose tap lose attachment with the labour market exceeds some of their skills, a practice with some stigmatism around being made unemployed, which makes it harder to be hired, perhaps the work that you go back to tends to be slightly less good a match for your skills, because you feel the need to take whatever work comes along during a downturn or when you're unemployed. And also, because there's a huge amount of sort of firm, specific human capital built into a lot of matches between employers and employees, which is sort of lost when that match is broken, and unemployment occurs. And clearly the the, the the pandemic and the associated policy responses involved a huge collapse in economic activity. And that can't help but be felt in the labour market in some way. But again, to this point about the difference in institutions, meaning that different countries are affected in different ways, the ways in which those shocks the labour market played out across the world sort of differ quite radically. So in the US, what we saw was a huge spike in unemployment with the government allowing jobs to be lost, but then directly subsidising people's incomes. Whereas in Europe, the UK, we had a lot more of these furlough, part time work schemes where government protected labour market matches so there wasn't a huge spike in unemployment. But there was instead a collapse in hours worked and in the short term, at least, wages. And so given those different labour market institutions and therefore different labour market results, it's quite likely that we're going to see quite different impacts in in the labour market across different countries in terms of the amount of scarring So, for those countries that adopted more of these part time schemes, and we didn't see a big increase in unemployment, perhaps you're less worried about a permanent loss of participation in the labour market, you're less worried about a loss of some of the firm's specific human capital that's embedded in various matches because employment matches were preserved, but maybe you're more worried than you would be say in the us about the speed in which work can be reallocated to wherever it is that they need to go, given the changes that might be occurring in the economy. So you get some permanent damage in those countries because it's a little bit snarled up reallocation process. And indeed, it speaks to this zombification point that we were previously talking about.

Stephanie Kelly  20:17  

So that's really interesting. And I think I mean, maybe in the in a little bit, we can get on to some of the potential upsides that might come through in the labour market might be a place to talk with that. But before that, obviously, with all the changes that have taken place to people's lives, and the way we interact economically, socially, personally, professionally, what kind of evidence is there around the role of beliefs and how beliefs might have shifted and been changed -  Paul, I might bring you in on this?

Paul Diggle 20:43  

Yeah, so called belief scarring is actually a pretty well documented economic, or even sort of psychological phenomenon in which economic agents, people, companies, who experience a large negative shock a lot of bad economic event, revise their priors, their beliefs about how risky The world is, and what's the likelihood of a future pandemic, where you might well raise that probability in your mind having experienced one in your lifetime, and people's economic behaviour changes as a result, their consumption decisions or investment decisions, their savings decision so individuals, firms desired saving might have gone up to protect against a future economic shock, desired investment might have gone down because you don't want to be left with all this capital in in the event of a big negative economic shock. And there's pretty good economic evidence of that kind of psychological scarring, belief scarring, occurs. So a really nice study is sort of known as, quote, depression babies, is a benchmark piece of work, which shows you that individuals who in formative younger years, experience very poor equity market performance, then take less financial risk or are less invested in the future, they don't participate in financial markets as much because of that, that belief scarring that they had in certain formative years. So these behaviours really stick and have quite profound macro-economic impacts. And in particular, if everyone wants to save more, invest less well, that has to equilibrate by pushing down on the neutral rate of interest in the economy, interest rates go lower because of that, and especially in a world where central banks are struggling with the lower bound on interest rates, and they can't actually take policy rates any lower, if the neutral rate sort of moves lower, there's actually less room for monetary policymakers to add stimulus to the economy. So the world does indeed become a riskier place, because policy room is removed, because of people and companies changes in their beliefs about the risk riskiness of the world. So this is, I think, a really interesting to have psychological behavioural channel of scarring that we think applies this time around as well, particularly in those countries that had a very bad pandemic experience. But I mean, a couple of nuances, vaccines came to the rescue very quickly, this time around. So perhaps our belief scarring was actually ameliorated by the speed with which science bailed us out of this situation, I mean, with remarkable speed. So maybe you think, well, the pandemic happens, again, a new virus loosened on the world, and but the virus vaccines can come to the rescue. So I think there's an interesting interplay there and that, perhaps, perhaps, reduces some of the belief scarring. And the other thing I think economic agents learned and you see playing out in financial markets, is that the monetary and fiscal policy backstops or support the pot that gets put in place in the event of a large negative shock is actually very big. And that could I think, sort of shore up people's beliefs or their optimism about the future. And particularly in countries where the policy response was very strong. The US is probably a good example, but China in a different way, that could probably offset some of the belief scarring. So I think, again, it's to Luke's point that it plays out differently in different countries but it's an important channel of damage.

Stephanie Kelly  24:22  

And I think that point you just made on policy is an interesting one, because we are talking about the crisis as though it is over. But for many, many listeners around the world and indeed for you know, ourselves based in the UK recording this, there are ongoing impacts of the covid 19 crisis, there are still lots of cases, there are still people in hospital, there's still people dying from it. There is still concerns about things like vaccine efficacy waning all of those kinds of things. So that the role of policy assumedly isn't over. It's its role isn't done on and interested, Luke, as to what kind of policy concerns you have now in terms of the risk of long term scarring 

Luke Bartholomew  25:00  

Yeah, so as Paul said that the initial policy response to the COVID shock in a lot of countries, looks on, you know, pretty standard measures and you know, it's sometimes not easy to measure exactly the size of the policy response, but looks by all intents and purposes, like it was a huge, huge increase in government debt to GDP, huge increase in central bank balance sheets, but big reduction in interest rates across the board where that was possible. The point though, is that that is also exactly what things look like in 2008, 2009, immediately after the financial crisis, it looked like a huge policy response. But nonetheless, we then had 10 years after that of extremely sluggish growth. And as Paul said at the start, they're locked in a fair degree of permanent damage in the Eurozone. And that in our assessment was largely because policy support was withdrawn to early policymakers, both fiscal and monetary, were insufficiently sensitive. And so our concern is that that risk or se applies here, as you say, Steph, we are far from out of the woods, across the global economy. And so the concern is that, you know, already you're seeing a turn to sort of austerity, rhetoric in some countries and central banks, reaction functions are proving to be a little bit more hawkish than we might have expected, a little bit more concerned about the pickup in inflation than we might have expected. So I think there are good reasons to be concerned about the way in which policymakers will be supportive of demand side weakness, and as I said, like, there are lots of ways in which demand side weakness can turn into permanent and permanent damage. But of course, there's also sort of failure that policymakers could, perhaps because they're so distracted, or not so much distracted, that's probably the wrong word, but preoccupied and focused on COVID, that they are able to push through other forms of structural reform and supply side boosting policies that they otherwise would have done, that they feel their budgets are constrained, and they can't invest in infrastructure, or green transition projects, or whatever else it might be, because they feel like having spent so much money on COVID response that there's a need to be running tighter fiscal policy, and as a consequence of that, and we would think of that as again, like a policy error that we would lock in permanent damage as well.

Stephanie Kelly  27:40  

Okay, so I think I mean, we've covered a lot of the scarring and the damage, andthe negatives when it comes to COVID. I mean, are there potential upsides from the crisis, technologies that have emerged behaviours that have emerged? What are the factors you look at as potential sources of long term, you know, improvements in potential growth and improvements in innovation? 

Luke Bartholomew  28:05  

Yeah, so I think there are several potential bits of sunlight in all of this gloom. The first thing to say is that, you know, there are good behavioural reasons for thinking that on the whole way, for one of a better phrase, creatures of habit, that we don't necessarily experiment enough, we get stuck in patterns and habits of behaviour, which might turn out to be sub optimal. And not what we need is some big shock to come along to make us reassess exactly whether we're happy with the way in which we're doing things and whether there might be more efficient ways of doing things, then there are various quite interesting behavioural studies on this kind of kind of dynamic. And you know, it's pretty obvious, as we discussed at the very start, indeed, that the shock from the pandemic has to lead to all sorts of behavioural changes in the way that we work and the way that we consume, the way that goods are produced. And some of those might turn out to be frankly, more efficient, and indeed more conducive to human wellbeing. So that could potentially be an upside in the working from home, consuming from home and obvious examples of that, but there are many others as well and for that transition to occur, there's likely to have to be a fair degree of investment as well. So there will be presumably investment in certain kinds of digital technology communication, that needs to occur to enable some of those changes in patterns of behaviour. So that's one potential upside. And then some of more speculatively, and Paul talked about this a little bit, this idea of vaccines coming to the rescue there in the sense that perhaps we're on the cusp of a huge wave of further innovations in biomedical science. So back in the 1980s there's a thing called the solo paradox that economists used to talk about. And Bob Solo, who's quite a famous economist said something to the effect of well, you can see the impact of the IT revolution everywhere apart from in the productivity figures. This was when computers were just starting to get into offices and homes, the physical world seem to be changing, because IT was coming in yet, in brute economic statistics, that was just very little evidence, it was doing much to boost productivity and changing economic activity. Well, then the 90s came along, and productivity growth suddenly soared in the US , sort of all that investment in it in the 80s was suddenly coming to fruition. And the reason I tell this story is that you could tell something similar about biomedical science in this way, and that, you know, the genome was cracked in the early noughties, it was extremely expensive and then for a long time afterwards, whilst the science was progressing, and if you were to our scientists, they would tell you about the huge advances that were happening there, there wasn't a huge amount of it showing up in the productivity figures as it were, or indeed, sort of like day to day ways in which it was affecting our lives, while perhaps the MRNA vaccines is the first bit of that starting to come through, the work in pure science, finally showing its payoffs in vaccine technology. And indeed, other forms of technology that will a boost our healthcare and our quality of life, but also could be the kind of thing that economists referred to as general purpose technologies, the kind of innovations and improvements that have trickle down effects across the entire economy by making us more productive. So that's another perhaps, as I say, slightly more speculative, but another way in which COVID, and the associated policy responses and science responses might have some upsides.

Stephanie Kelly  31:57  

Yeah, absolutely. That's I mean, I guess I'm more positive note, and I have to admit, I am one of those people who traded a city centre flat for a house in the country, never would have I have considered it before COVID happened so I think we do see day to day huge, huge shifts, and not all for the negative. Maybe, Paul, if we could wrap up then in terms of bringing together what your conclusions are, and in particular, what all of this means for investors?

Paul  Diggle 32:22  

Yeah, so I think we have a few conclusions. The first one is, there will be lasting economic impact from the pandemic. And as we sort of talked about, we think that overall, the negatives probably outweigh the positives, at least in terms of the levels impact on global GDP. So in the research piece, we estimate about a 3% permit level shock from the pandemic, the global economy is 3%, smaller in perpetuity than it would have been. And that's to put that in context, it's a lot smaller than the financial crisis, which was perhaps six or 7% in global terms. And that grew over time, as we said at the start, but it's a lot bigger than your typical recession, let alone your typical natural disaster where you don't see any lasting impact. So COVID, sort of somewhere in the middle of those things. It's not enough, just natural disaster had much more profound effects than that it's not your run of the mill recession. But it's not the global financial crisis. And the second one is there are big regional divergences and some of these impacts we've been talking about. Perhaps there's much less in the in the way of long term damage in the US and China for slightly different reasons, in the US has case for the size of policy responses, especially fiscal policy response, which is might not even be done yet. And in China's case, it's probably for COVID handling reasons, the initial success that China had in containing the virus, although actually, as we've talked about elsewhere, that starts to look like a bit more of a drawback in the age of vaccines and the infectious Delta variant, but zero COVID at first was, I think, a highly successful strategy that probably limit some of the psychological damage channels we talked about. And then perhaps the damage is much more where there was less in the way of policy response. The vaccine rollout was slower monetary and fiscal offsets were smaller. And a lot of that is sort of the EMX China world, particularly Latin America might include that and then Europe, the UK, perhaps somewhere in the middle. So that's the second conclusion then what does all this mean for investors? Well, a high level, I mean, lower output. downward pressure on equilibrium interest rates I was talking about earlier, probably reinforced the lower for longer or the new normal as people call it, the new normal world that pertain before the financial crisis. We don't really buy into arguments that the crisis breaks us out that dynamic into a world of higher inflation, or higher growth paradigms. It probably really, if anything reinforces that, it increases demand for safe assets, lowers the term premia, probably lowers interest rates. Quite how that impacts risk markets is not necessarily clear. Lower growth is generally a headwind for corporate earnings but a lower discount rate is positive for the valuation of equity markets. And so far at least, it actually seems like the lower discount rate channel has dominated and equity risk premia have actually been pushed lower. And hence, equities higher as that belief in monetary and fiscal support has sort of supported a lot of a lot of markets. And then the final thing I want to say is linked to some of the positives that Luke was talking about. To the extent there is structural change in the economy, investors have a role in funding that structural change. And that brings about a lot of specific investment opportunities, stematic opportunities, and things like digitalization healthcare spending, on-shoring, reshoring, shortening supply chains, the priority after the crisis will clearly be sort of building back better. So opportunities in clean technology. So a big role for investors sort of help bring about the structural change, that the pandemic is going to leave.

Stephanie Kelly  36:14  

That's a really I think, exciting idea for investors to leave them with on what is otherwise I think, in many ways, pretty challenging topic. And I'm afraid that is all the time we have for today. But a huge thanks to Paul and Luke for joining. And to our audience again for tuning in. Paul is going to be hosting for his last episode before going on paternity leave next time round so please do join us then.

Voiceover  36:42  

This podcast is provided for general information only and assumes a certain level of knowledge of financial markets. It is provided for informational purposes only and should not be considered as an offer, investment recommendation or solicitation to deal in any of the investments or products mentioned herein and does not constitute investment research. The views in this podcast are those of the contributors at the time of publication and do not necessarily reflect those of abrdn. The companies discussed in this podcast have been selected for illustrative purposes only, or to demonstrate our investment management style and not as an investment recommendation or indication of their future performance. The value of investments and the income from them can go down as well as up and investors may get back less than the amount invested. Past performance is not a guide to future returns, return projections or estimates and provide no guarantee of future results.