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