MNI BRIEF: Post-Covid Demand Hit Likely, ECB Survey Finds

The coronavirus pandemic could lead to long-term changes in both consumer behavior and how businesses operate, an ad hoc European Central Bank survey of leading companies found, with increased remote working and accelerating digitalisation the most commonly cited, alongside concerns over reduced demand. Almost one in three of the 72 leading non-financial companies questioned, comprising around 60% "industrials" and 40% "services," said there could be reduced demand over the longer-term for their products or services as a result of the crisis.

More than one in five identified potentially lasting changes in the structure of demand, with increased conduct of business and consumption online and a consequent reduction in travel cited as likely explanations. Some 60% of respondents said they expect the pandemic to have a positive long-term impact on productivity in their business or sector, though 55% anticipated a negative impact on employment, with only 10% foreseeing a positive effect, the survey showed.

More than 50% of respondents thought that there would be increased market concentration in their sector, compared with 25% who disagreed with this statement, with mergers expected to play a greater role than firms exiting the market. A majority of surveyed felt their supply chains were unlikely to become more diversified or localised, although the overwhelming majority did not expect their business or sector to internalise more parts of the supply chain.