Economic Resilience Challenge
Economic resilience challenges occur when there is a loss of confidence in the economy. This can be seen as a reduction in investment, leading company closures, job losses, and a general reduction in consumer spending . Severity is a product of impact and duration; extreme events will be deeper and longer than mild ones.
Minor Resilience Challenge
A typical minor economic challenge is the sudden closure of a large local employer in a town. Whilst this creates clear economic hardship for those directly effected by the closure, the closure is likely to have a ripple out impact for the suppliers and customers of that company, often leading to other job losses.
This potential impact can be reduced for towns with strong economic fundamentals, i.e. lots of other companies that have vacancies for the newly-redundant staff to move into, though this can often be an issue for specialised mid and later career workers who may struggle to move between roles and/or industries.
Examples
Average Resilience Challenge
When a single company fails, it’s often down to conditions that only affect that company. However, when there are conditions that affect a number of companies, the economic challenge is more pronounced, resulting in the closure and down-scaling of multiple companies.
Towns with a significant tourism industry are always hostage to the wrong kind of weather, in that tourists will generally cancel or cut short their holidays when it’s too hot, cold, wet, or dry to have a good holiday. This will lead to an under-utilisation of holiday-centered businesses (hotels, restaurants, attractions etc), which will lead to those businesses scaling black, or closing their operations. For staff losing their jobs, the outcome can be bleak if the town is centered around tourism.
However, towns with strong economic fundamentals, i.e. multiple employment sectors, will fare better as other industries can recruit staff, e.g. from tourism to manufacturing.
Examples
Major Resilience Challenge
A major economic resilience challenge occurs when economic issues move from being local to regional or global. As we’ve seen from recent COVID events, something can happen in a country far, far away and its impact quickly spreads around the world causing unprecedented levels of hardship.
The response to COVID was to lock-down the population, greatly reducing spending, which resulted in many companies experiencing financial hardships and going bust.
Examples