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Worlds apart: how life has changed in 250 years

Date: 10 February 2021

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1. Born during the industrial revolution

When Quilter Cheviot was founded in 1771, the first industrial revolution had only just begun. During this period, industries that used hand production methods became mechanised and increasingly used steam power. Economic historians believe this revolution marked the beginning of an era of continuous economic growth, driven by productivity.

As we move into 2021, we have now entered the fourth industrial revolution, showing that real change in manufacturing can be measured in centuries rather than decades. Greater connectivity of factories to the internet, increasing penetration of automation and the growing use of software for analysis is driving a further step of change in productivity. This trend towards ‘smart connectivity’ has become more relevant in the middle of the coronavirus pandemic, as manufacturing companies look to achieve greater resilience by building more facilities locally and by relying more on the remote monitoring of processes.

In the next 250 years, many of today’s megatrends of urbanisation, electrification and automation will have continued to intensify: yet another industrial revolution. This will result in little reliance for on-site labour, with energy generation being derived exclusively from renewable sources. Even so, don’t expect to see the full-scale demise of employees, as the human role in manufacturing will constantly evolve to focus on face-to-face customer interaction, based on a through analysis of their data.

2. Simplification through digitisation

The definition of technology is using skills, methods, and processes to achieve goals and make tasks easier. Several hundred years ago, this would mainly have been labour substitution and equipment, including ploughs and farming equipment. The printing press, invented in the 1400s, was that era’s equivalent of the internet, making knowledge available to more people than ever before. In 1834, Charles Babbage invented the difference engine, which was recognised as one of the earliest computers. But the first programmable computer, as we know it, was very likely The Colossus, developed by Tommy Flowers in 1943 at Bletchley Park.

In recent years, the world has been undergoing a major digital shift and Covid-19 has accelerated the rate of adoption. People have seen the benefits of working from home and of working in a more digital world, so these trends and growth areas are likely to stay.

There are five main themes that have emerged as a result of Covid-19 and that will continue through 2021: working from home, e-commerce, gaming, TV streaming and e-learning. Spending trends on digitisation projects and the move to cloud will also continue into 2021 and beyond.

Since the invention of the iPhone in 2007, computing has become simpler, more powerful and mobile. Looking ahead 250 years from now, computers will do more for humans and humans will work more closely with computers, so that they can better support us. They will almost be like an assistant and reduce whatever pain points the user is facing.

The use of machine learning and computer intelligence will increase, meaning that computers will become more intuitive and easier to interact with. We won’t be using keyboards either. Instead, we will speak to computers, like we do virtual assistants Siri and Alexa now. In the future, computers will be increasingly integrated into our daily lives, where it makes our lives simpler and better.

3. Improving lifestyles

When Quilter Cheviot’s forebears were in their infancy, the understanding of diseases was generally poor. Life expectancy was fairly short as a result, with people typically living to between the ages of 30 and 35.

The first successful vaccine to be developed was for smallpox in 1796. Over the years, there were many more life-saving healthcare inventions and developments, among them the invention of the stethoscope in 1816.

Prior to the first use of general anaesthetic in the middle of the 1800s, surgery was undertaken only as a last resort. The X-ray became the first medical imaging machine when it was invented in 1895 and penicillin was the first antibiotic, discovered accidentally in 1928 by Sir Alexander Fleming. In 1954, the first successful organ transplant took place when surgeons performed a kidney transfer.

The Covid-19 pandemic has brought healthcare to the fore. In the coming year, the focus for the healthcare sector will be on Covid-19 vaccine development and rollout. The Pfizer/ BioNTech vaccination programme got underway in the UK in December and distribution should continue apace over the coming months. There has also been progress with other vaccines, some already available, with a number potentially being made available through 2021.

Elsewhere, digital healthcare advances will continue, such as robotic assisted surgery, biosensors and trackers, medical artificial intelligence applications and telemedicine. We could also see the increased use of personalised medicine and genetic medicine.

Fast forward 250 years and these significant technological advancements will mean people are living far longer, with the possibility of many more people living to the age of 150. With healthcare going increasingly digital, human intervention may be redundant. It is likely that the treatment of once life-threatening illnesses will be considered relatively routine and the many functions previously performed in a clinical setting will be automated and supplied to patients at home.

4. Wither the high street?

Two of the biggest supermarkets today, Sainsbury’s and Wm Morrison, have existed since the 1800s, and their longevity can likely be attributed to adapting to changing consumer tastes and diets. This is because, over the past two and a half centuries, consumption has changed dramatically. In the 1700s, people consumed larger quantities of meat, and many of the fruits and vegetables that we enjoy today were only beginning to be introduced to the European palate. Fashion trends and leisure activities have also evolved beyond recognition from 250 years ago.

In the present day, we have more consumer goods at our fingertips than ever before. Online retail has been a growing trend for much of the past two decades and Covid-19 caused this sector to soar. While people will no doubt go back to shopping in stores when the pandemic ends, there are predictions these outings will be less frequent than in the past.

In a recessionary environment as we are seeing during the pandemic, people are likely to be more careful with their spending and this will result in more households continuing to cook and eat at home. However, when shops, restaurants and pubs open up again, there will be pent-up demand for travel, restaurants, entertaining and shopping.

Nevertheless, the unfortunate reality is that many retail businesses are likely to disappear. This trend was already underway on the UK’s high streets, but it has been hastened by Covid-19. What has emerged is that consumers prefer brands with broader offerings, such as Next. Moreover, in a recession, consumers often turn to brands that offer better perceived value, such as Primark and boohoo. While luxury brands have performed well in recent years, mass market brands will continue to struggle.

One thing that is apparent is that the pandemic has delayed the retail industry from implementing more sustainable practices. But in the distant future, there is every likelihood grocers and clothing retailers will have a focus on sustainability and more people will adopt plantbased diets. The way in which we shop will also be more technologically driven.

5. Driving change

Back in 1769, French engineer and mechanic Nicolas-Joseph Cugnot built the first steam-powered automobile capable of human transportation. The French Army used it to haul artillery at a whopping speed 2.5 mph on only three wheels.

Today, electrification is the next big evolution of the powertrain in the automotive industry, with an increasing number of countries looking to ban the sale of gasoline or diesel vehicles from 2025. We estimate fully electric vehicles could reach 80% of sales by 2040. As cars become electrified, they will also be increasingly defined by software. This will eventually pave the way for autonomous driving as selective procedures and manoeuvres gradually become automated.

During the first industrial revolution, the development of iron technology unfolded in the second half of the 18th Century and had a profound influence on society, as well as on building technology. The large-scale development of iron was enhanced by using steam engines to produce rolled lengths of wrought-iron bars, angles, and other shapes. Brick production was later industrialised in the 19th century and, in the 20th century elevators and cranes made high-rise buildings possible.

Today, energy conservation and sustainable development have become more important issues in construction. According to the European Commission, buildings account for 40% of Europe’s energy consumption and its existing building stock is old and energy intensive. Nearly half of the buildings in Europe were constructed before 1970, when the first building energy efficiency standards were introduced. The Green Deal Roadmap proposes that EU countries should engage in a ‘renovation wave’ of public and private buildings. This will drive demand for insulation products, improved energy performance of heating, ventilation and air conditioning, and harvesting of rainwater.

6. The great energy transition

The oil industry as we know it did not exist 250 years ago and will not exist in 250 years’ time. But in that time, it has changed human life on the planet beyond recognition. The industry came to being in the second half of the 1800s out of demand for kerosene, which provided light for an industrialising world. It was further propelled by the development of the internal combustion engine, plastics and air travel.

The next 250 years will be a story of the transition to cleaner forms of power and transportation. Case in point: the adoption of electric vehicles is happening before our eyes. But hydrogen and other yet-to-bediscovered energy sources will surely emerge as well. This kind of change is nothing new. Just as kerosene replaced whale oil and electricity generated by oil and gas has largely replaced coal, clean electricity will replace carbon-intensive power sources. For oil companies to prosper in the future, they will need to adapt and judge their investments carefully.

The period when an industry is being disrupted is a dangerous one for investors. Oil demand will not vanish overnight and will, in fact, increase in many emerging economies before it peaks. Some uses for oil can be replaced quickly, whereas others will require further technological development. This is the backdrop for the oil sector in 2021 and it is further complicated by a pandemic that has made its mark on fossil fuel consumption patterns. It is likely demand for oil will increase as vaccines enable a return to more normal consumer behaviour. Supply will be constrained by a reluctance by private companies to invest in multidecade projects with uncertain returns.

7. Not so hot property?

The industrial revolution was an era of huge advancements in manufacturing, automation and industry. It also marked the creation of a new asset class in the UK – property, which began to be used for industrial purposes. Industrial property today is almost unrecognisable, more likely being used for an Amazon warehouse or a data centre, rather than a cotton mill.

The advent of the steam train eventually led to longdistance commuting, establishing London as a destination for office workers and turning the city’s commercial property into an investment opportunity. In 2020, however, most offices lay empty as remote working became the norm during the pandemic.

With that in mind, 2021 is likely to be a year of considerable change. We all hope that the vaccines bring about a return to normality, but it may not be so simple. Office workers are expected to return to city centres, but almost certainly less frequently. The office market should bounce back as a result, but we are more concerned with the impact on London retail and leisure properties. Outside of the tourist hubs, many shops and cafes rely on office worker footfall, which may not recover. On the flip-side, this could be beneficial for the much-maligned local high street.

A number of property companies have begun to talk about permanently reallocating space from out-of-town retail. This may be the other big trend of the year – converting out-of-favour shopping centres for other uses. The problem landlords still face is that, while retail values are falling, they are still worth more than their alternative use, although that gap is shrinking.

The property market of 2270 is unlikely to resemble the current one, with perhaps one exception. Just as in 1770, people will always need a place to live, and the residential market should still be in demand. Elsewhere, consider what new technology could revolutionise the landscape. We’re thinking hydroponic indoor farms, producing food efficiently for a growing population, or vast renewable energy farms generating and storing power for a postfossil fuel world. Speaking of which, consider also the impact of climate change. We would be nervous buying land at or near sea level for use in 250 years’ time.

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Authors

Amisha Chohan

Executive Director, Head of Small Cap Strategy

Ben Barringer

Equity Research Analyst

Chris Beckett

Head of Equity Research

Mamta Valechha

Equity Research Analyst

Oliver Creasey

Equity Research Analyst

Sanjay Patel

Global Industrials Equity Research Analyst

Sheena Berry

Equity Research Analyst