Coronavirus is our biggest economic threat since the Great Depression – it’s time to summon our famed Blitz spirit
AS the coronavirus casts its dark shadow across the world, the global economy teeters on the brink of collapse.
Here in Britain this week, the signs of deepening crisis are all around us: in empty supermarket shelves, deserted railway stations, vacant shops and closed sports venues.
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A sense of looming catastrophe hangs in the air. Even the M25, once nicknamed the world’s largest car park for its notorious congestion, has been eerily quiet.
There has not been a sustained public emergency like this since the end of the Second World War.
Just this week, a leaked Public Health England report predicted that, in a worse case scenario, 80 per cent of Brits could be infected by the virus.
Yet almost as devastating as the impact this would have on the NHS are the potential consequences for our economy.
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Biggest threat since Great Depression
Not since the Great Depression at the end of the 1920s has our prosperity been under as great a threat as business failures, mass unemployment and poverty now beckon.
With public debt ballooning and companies struggling, the whole financial system will be under desperate pressure.
Our economy could shrink by five per cent in the second quarter this year, worse than anything seen in the financial crash of 2008, according to a prediction by independent analyst Capital Economics.
Already, global markets are in freefall. In London, the FTSE 100 Index has fallen by a third since the outbreak of the coronavirus, dropping below 5000 points for the first time since 2011.
In this atmosphere of meltdown, the US has slashed interest rates to zero, while vowing to pump £570 billion back into the economy to confront any fallout.
On this side of the Atlantic, our own government plans a colossal increase in spending, including an extra £120 billion-a-year on infrastructure projects and a £30 billion scheme for tackling the coronavirus.
Sensible or scare-mongering?
Some commentators feel that the Covid-19 crisis amounts to nothing more than irrational hysteria.
When he reached office at the height of the Great Depression, US President Franklin D. Roosevelt famously declared that “we have nothing to fear but fear itself”.
In the same spirit, are today’s media and politicians needlessly whipping up a panic over coronavirus?
Isn’t a calm outlook the best antidote, in place of scare-mongering and melodrama?
Aren’t our leaders deliberately talking Britain into a recession with their doom-laden approach?
In support of these arguments, it could be pointed out that the actual number of cases, at only 1950, remains small, compared to a host of other diseases.
Just 56 people have died so far in Britain from the disease, whereas 17,000 people die annually from influenza.
Similarly, the number of Covid-19 fatalities so far pales beside the 164,000 who die every year from cancer, the 170,000 from heart disease, the 7551 from alcoholism, or the 6507 from suicide.
Even the number of deaths from drowning, at 263 in 2018, is much higher.
Fears of a modern plague
None of these other death tolls ever brought the country to a halt. But there are a number of special factors with Covid-19 that make it much more dangerous.
First of all, there is neither a known vaccine nor much knowledge about the disease.
Second, we are just at the start of the pandemic and it could turn out to be a modern plague because of our lack of immunity.
“Anyone who tells you that they know what is going to happen in the next six months is wrong,” says Professor Graham Medley, the distinguished expert in infectious diseases.
Anyone who tells you that they know what is going to happen in the next six months is wrong
Professor Graham Medley
All this means that drastic measures have to be taken by the Government to contain the virus.
Complacency would be a sure recipe for a worsening health crisis.
The problem is the economy will take a massive hit when that robust action is combined with public fears and soaring levels of sickness among workers.
Indeed, the coronavirus crisis graphically shows how our comfortable lifestyles are built on fragile, shallow foundations.
Misery for workers
That economic vulnerability is heightened by two defining features of our age.
One is globalisation, which has created complex supply lines and a reliance on migrant labour.
But when those connections break down because of a crisis, the whole global economy freezes with brutal results.
The second is the dominance of Britain’s service sector.
With the decline of agriculture and industry, services – including retail, finance, housing and hospitality – account for 80 per cent of the economy and 80 per cent of the national workforce.
But that narrow focus leaves all of us badly exposed when a storm blows through the sector, putting the whole economy in trouble.
My industry might be dead for six months. I have nothing booked for this week or next week at all
OIlie Appleton, events organiser
On every front, the coronavirus is leaving wreckage in its wake.
With international travel paralysed, many airlines are now staring at bankruptcy.
Only yesterday, Ryanair said that it would ground 80 per cent of all flights, while Willie Walsh, the head of IAG which owns British Airways, announced a reduction in capacity by 75 per cent.
The hospitality and hotel trade has been equally badly hit, with some firms seeing a 70 per cent drop in bookings as customers remain at home.
Ollie Appleton, a freelance events organiser, complains that his income has fallen by 75 per cent since the start of the outbreak.
“My industry might be dead for six months. I have nothing booked for this week or next week at all.”
Many of Britain’s five million self-employed, the backbone of the enterprise economy, are in the same position.
Worse than 2008 financial crash
The current picture is already looking worse than 2008. The spectre of meltdown is approaching.
Rail passenger numbers are now down by a third, prompting the franchise holders to appeal for a bailout from the Government.
Users of bus services and the London underground have also plummeted.
Worth £70 billion to the economy, the night time sector – like clubs and cinemas - is reeling, especially because profit margins are so tight.
There is no doubt that this is going to decimate the night time economy. It’s almost catastrophic
Jonathan Downey, the London Union
“There is no doubt that this is going to decimate the night time economy. It’s almost catastrophic,” says Jonathan Downey of the firm the London Union.
In response to the Government's drive for a nationwide lockdown, London's theatreland has closed and the Odeon cinema chain has suspended screenings
The high street, already weakened by only competition and the burden of heavy business rates, is now suffering from a further decline in shoppers.
Primark had to suspend its shares yesterday, while the home interiors chain Laura Ashley has today gone into administration.
Uncertainty is now freezing the property market, for so long the engine of economic growth, with viewings and sales in decline amid talk of a significant fall in house prices.
Britain must show its famed resilience
In all this gloom, our ministers face a hellish responsibility.
They both have to protect the public and shore up the economy. The very survival of our society is at stake.
As the Government has set out this week, extraordinary steps are required to constrain the virus and sustain commerce.
The authorities will have to be "draconian" in enforcing the lockdown.
The Treasury will have to turn on the spending taps as never before, from welfare support to business loans.
In this emergency, much of our civic life will effectively have to be nationalised, just as happened during the war, when the state accounted for 75 per cent of the economy by 1945.
But our heroic victory in that conflict shows that Britain can take it.
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The Government’s gargantuan task will be easier if our nation shows its traditional spirit of resilience.
The prospects might look nightmarish now, yet we can still pull through.
Boris has always hero-worshipped Winston Churchill. Now, in our darkest hour in modern peacetime, he has the opportunity to show that he is made of the same stuff.