This article was originally published in October 2020.

As we adjust to what may be a permanent shift from 95% to 80% capacity in the economy, we face penalties in terms of price, choice and quality.

Announcements of store closures and job losses are coming thick and fast. Mulberry, the luxury fashion retailer, is to axe 25% of its workforce. Monsoon Accessorize is to shut 22% of its stores. Centrica is to reduce its workforce by a fifth, as is Rolls-Royce. Accenture estimates that its revenues will be down 18% this year and is shaping up to make job cuts of at least 10%. BP and HSBC have announced global headcount reductions of 15%. Pizza Express is to close 15% of its restaurants and Marks and Spencer plans to cut 10% of stores by 2022.

The proportions may vary but are all broadly consistent with a 15% to 20% capacity reduction. The journey from a 95% economy (in February) to an 80% economy (now) requires massive adjustments: 95% can support a much higher cost base and headcount. While 95% was marginally profitable across the size spectrum of corporate activity, 80% is not. Loss-making activities, formerly cross-subsidised, have become unaffordable.