We have to get the economy going again, and it is time to start thinking about how this might safely be done.
Sadly, the peak in UK deaths may not be for another week, as the Health Secretary Matt Hancock has warned.
Even then, severe restrictions on movement will surely remain in place, and may even need to be tightened.
Looking ahead: Normal life will eventually have to be rebuilt, and the more swiftly and thoughtfully that can be done, the lower the long-term cost to all of us
But normal life will eventually have to be rebuilt, and the more swiftly and thoughtfully that can be done, the lower the long-term cost to all of us.
This is a global economic imperative, as we can see from the soaring unemployment projections around the world, but it is also a social one. Stopping people from carrying out their daily activities is bad for their physical and mental health, as well as their family finances.
The Government has done much of what it can to buffer us from the worst effects of a frozen economy.
But whatever it does will never be enough, for there will always be firms and individuals who will fall through the cracks.
Some industries are particularly vulnerable: the airlines, for example. But every day that passes reveals less obvious examples of the damage.
A good, if deeply troubling instance is the plight of farmers who need to get people to harvest their crops, as we report on the page opposite. Another is Nationwide scrapping its plans to go into the business market.
The UK’s biggest building society would have been a truly welcome competitor to the mainstream banks. But it cannot now justify the investment. We have no idea how many shuttered small businesses will reopen, but we know for sure that some won’t. So we have to find ways to get things moving. Other countries have started to think about this.
The IFO Institute, the leading German economic research group, is pulling together a group of doctors, scientists and economists to develop a plan for a gradual easing of restrictions.
These ideas include much more testing, something that Germany seems to be doing well, and also a phased path back to normality. ‘Sectors with a low risk of infection, such as highly automated factories, and areas with less vulnerable persons, such as schools and universities, should be first to have restrictions lifted,’ it says.
The IFO president Clemens Fuest puts the challenge this way: ‘Public health and a stable economy are by no means mutually exclusive. Just as positive economic development is not possible with an uncontrolled spread of the virus, the efficiency of our health system cannot be maintained without a functioning economy.’
We need the functioning economy. No European country is yet in the position to start easing restrictions, which for the time being carry solid popular support. It may be some weeks before we can safely do anything.
But that should not stop us planning – and figuring out some way to get those crops harvested before they rot in the fields is not a bad place to start.
At times like this history gives us something to hold on to. March marked the end of the worst quarter for both UK and US shares since the final quarter of 1987.
The FTSE 100 index was down 25 per cent and the Dow down 23 per cent. Shocking? Well, yes, but so far remarkably similar not only to the 1987 crash but also to two other humdingers, the falls that began in October 1929 and October 2008.
Unfortunately, the trajectory of a crash tells us nothing about the timing or strength of the recovery.
In 1929, the plunge on Wall Street ran on until March 1933. The killer for most investors was not the initial crash in 1929, though that still resonates, but the grinding downward slide of the next two-and-a-half years.
After 2008, the bottom was in February 2009, so a three-month slither. But in 1987, the bottom was reached in November, the next month, and that proved a great buying opportunity.
So is this more like 1929, 1987 or 2008?
Longview Economics, which pulled up the data, suggests that bear markets go through three phases: panic, relief, and demoralisation.
We have had the panic, and with that modest rally towards the end of last month, the relief. Now we should be prepared for the demoralisation, when markets go back towards (or below) their previous lows – as they did in 2008 – then begin the long climb back up.
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