Soaring costs could induce major behavioural change this year and those of us who rushed to move back home to Northern Ireland in 2021 are likely still happy with our decision, an economist tells Margaret Canning
The trauma of a pandemic brought upheaval in all our lives, even where we’ve been fortunate enough to avoid the direct impact of suffering from the virus.
Some of us made drastic decisions to move home to Northern Ireland after a long period away.
There might not be the same dramatic decisions to make this year, though it’s not going to be an entirely simple one, either. As well as continuing to live with Covid-19, this year we’ll also be living soaring energy costs and inflation, which may well force unwelcome changes upon us.
Neil Gibson, the chief economist at business advisory firm EY, thinks rising costs will be the economic trend which has the biggest impact on our lives during 2022.
“Prices will be a very big thing for this year and not something that I think will be an entirely temporary phenomenon.”
He predicts a lifestyle trend for people to take matters into their own hands when it comes to managing rising energy costs — you’ll just need a nest-egg to do so. Neil predicts a rise in popularity of solar panel installation, paid for with the savings which some people build up during lockdowns.
“I think the build-up of that income is predominantly in the higher-earners and retired people brackets.
“Last year you might have been thinking you’d keep your money safe under the bed and save it until the crisis passes. But now that money is eroding in value because of inflation, so now might be the year that you spend that money on solar panels to try and keep your energy costs down. It should be a matter for policy to encourage people who have built up money to spend it on reducing their energy costs through incentives — though of course that’s sensitive here in Northern Ireland.”
The first month of the year has brought a surge in cases of the new variant of Covid-19, which Neil thinks has left many of us feeling a bit more battered than we might have been earlier.
“With someone owing a business in the entertainment or leisure industry, will there be any mental or financial fatigue that makes some of those firms say, Omicron is the final straw?
“So we have to consider some of those cumulative effects of the pandemic so far.”
And restrictions are again applying to places like nightclubs, and many of us may have started to feel less inclined to go out to concerts or theatres as we’ve become so used to not having them available to us.
“Those things are not just fun to do but they make us good at what we do because we come back into work recharged and re-energised after doing them.
“A lot of our culture and leisure interests make us who we are — and the disruption of that has some effects on our ability to perform well at our jobs.”
He warns that a certain amount of apathy may have set in. “Because of the length of time this has been going on, people have maybe gotten into the way of doing things a bit differently.
“If you get out of the way of going to your clubs and societies, you can retract out of that a little bit, so you start to normalise the behaviour of not going anywhere. And that’s a worry that the demand can go for that type of business.
“Have we missed the joy of going out for a family meal or are we now used to the idea that we can replicate that in the house? We all knew the joy of being together when the pandemic hit for the first time, but it may be one of those things that it’s a little bit more of an effort to get people back to doing.”
Last year, Neil discussed the wave of people taking drastic life decisions during the pandemic and suggested that decisions may be influenced by proximity bias, where people feel that the conditions existing at a time of a big decision will endure.
Then they find themselves back at home living in Northern Ireland and wondering why they left their exciting, pre-pandemic lives in London behind.
But he doesn’t think buyer’s remorse has set in.
“We have to remember that some of the reasons for a move like that are still there.
“We’re still living a disrupted life. If one of the reasons you came back was that your enjoyment of the place you used to life was being disrupted, then that lifestyle will still be being disrupted.
“But if you’re in Northern Ireland now, with Omicron, and the dark January mornings, and you’re somewhere that’s closer to your family and you’re living somewhere where the housing costs are lower, then it still makes sense.
“But I think we’re through that early wave of people who made that decision.
“There will be a smaller trickle of people who will say, this is the straw that broke the camel’s back and I’m finally going to move back to Northern Ireland.”