A calculated response to each stage of the coronavirus is the right course – but this is no time for being timid

Editorial: As tactics like ‘social distancing’ come into use there will be knock-on effects for many businesses, so the government should be careful but decisive in its actions

A man on the Jubilee Line of the London Underground wearing a protective face mask

Guided, for a refreshing change, by the advice of experts, the government has determined that Britain is still in the “containment” stage of the coronavirus outbreak. The move towards the “delay” stage has itself been delayed, though the prime minister adds that the country is “probably” moving that way and preparations are speeding up.

No 10 acknowledges that the virus “is going to spread in a significant way”. Thus, for the time being, major sporting events, conferences and festivals can continue as planned. The Cheltenham Festival has been saved; the FA Cup final and Glastonbury may not be so fortunate. Whether people stay away, entirely of their own accord, is of course another matter.

For the immediate future, coronavirus is mutating into both a medical and an economic emergency. Stock markets around the world have experienced near-crash falls, slashing the value of people’s savings and pension pots at a stroke. The oil price has collapsed to an 11-year low, good for sustaining economic growth maybe, but not so much for the future of the planet.

Virtually every sector of every economy in our globalised world is affected by the coronavirus, and, as is their habit, markets have assumed the worst. The challenges faced by airlines, cruise operators, the hotel and hospitality trades are well documented, and severe. These sectors should be looking for the chancellor to follow up on his pledges of support for business, especially small business, with action in his Budget this week. This is not a moment for fiscal timidity.

But the coronavirus will hit many other companies, for example as workers stay home and self-isolate. As the crisis erodes consumer confidence more widely we may expect the property market, for example, to slow, and for new car sales, already depressed, to stall once again. As businesses feel the pinch from falling sales, they will need to run to the banks and to shareholders for support.

Shareholders’ faith is obviously already at a low ebb; but the banks too may be unable, or unwilling, to support businesses for precisely the same reasons – they cannot know for how long the crisis will last and whether the companies will even survive. If the banks start to suffer from defaults on their loans to businesses, then they will contract their lending further, which will push yet more businesses to bankruptcy. They will cease to lend to each other, and the contagion – financial rather than medical – will spread across the system. The familiar downward cycle that we witnessed during the financial crisis will be repeated.

That is why the chancellor and the Bank of England have no choice but to revive some of the support schemes that were used to great effect during 2008 to 2010. The chancellor might also consider a headline-grabbing cut in VAT, for say a year, to boost sales and the mood of shoppers.

Pre-empting the inevitable worsening of the coronavirus crisis in this way will help to reassure businesses and citizens alike that the government and the Bank of England are as good as their word. That they will indeed do what it takes to stop the slowdown as a result of the virus from turning into a self-generating slump. It is far better, and cheaper, to prevent an economy entering a tailspin than to attempt to pull it out of one.

Still, the next stages of the government’s response are drawing closer, and attention will switch to those most in jeopardy from “social distancing”. The smaller football and rugby clubs, for example, who rely on gate receipts more than on television and marketing revenues – which means scores of those outside the elite. If they are ordered to play their games “behind closed doors” then the consequences could be horrendous for two of our great national sports. For them the season cannot end soon enough.

Much the same goes for the minor racecourses and other venues. If the policy of “social distancing” is enforced strictly, then hard-pressed pubs and restaurants will see a further loss of custom, again with catastrophic consequences. The reverberations will not end there; and a sluggish UK economy could easily tip into outright recession.

The government is right to take a measured, proportionate approach at each stage of the crisis, with the expert advice of the medical and scientific officials to hand. There is no point in panicking the public, and destroying otherwise healthy enterprises, for the sake of being seen to “do something”. Timing is important.

Yet we know as a near-enough certainty that things will get worse before they get better, and it will be many months before the population builds up a natural immunity and a vaccine is developed. In the mean time, the chancellor and the Bank of England, in the name of long-term growth and stability, should abandon prudence, for a while.