Ian McConnell: The big calls that can limit Covid-19 coronavirus effect on livelihoods

Such discussion will hopefully persuade those who still need to be convinced, even amid the distressing pictures coming out of Italy and an increasing number of other countries including Spain, that they must change their behaviour to limit the spread of the deadly coronavirus.

The awful effect of Covid-19 is, of course, already apparent in the mounting UK death toll as well, and in ever more grim figures from the likes of New York, as it has been from the experience of countries including China and South Korea.

Limiting the loss of life is absolutely the priority in this fast-developing situation, and this is a time for the most drastic of measures.

Protecting the livelihoods of people is also crucial, both in the immediate crisis and its aftermath.

And this is where the very vivid language and observations around the scale of the troubles faced by countries around the globe present major challenges.

Bill de Blasio, mayor of New York City, was absolutely right to highlight the scale of the crisis over the weekend, in terms of driving action to combat the pandemic and leaving people in no doubt about the seriousness of the situation.

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He described the coronavirus outbreak as the biggest domestic crisis since the Great Depression, as he called for the US military to mobilise to help prevent the healthcare system from being overwhelmed.

Mr de Blasio said: “If we don’t get more ventilators in the next 10 days, people will die who don’t have to die.”

Governments and central banks have been pulling out all the stops to try to limit this human tragedy, and mitigate the effects on economies and living standards.

We are not yet halfway through the week and already it has been another tumultuous one of wild swings on global financial markets, amid uncertainty and huge policy measures.

There seems, rightly, to be a philosophy of “a stitch in time saves nine” about the efforts of governments and central banks from an economic standpoint.

It is obviously much more than a stitch, with the kitchen sink being thrown at trying to limit the scale of the damage to the economy.

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Governments and central banks around the world have been at pains not only to take the practical steps to stand behind individuals and businesses, as the pandemic has wrought havoc with people’s livelihoods, but also to act in a way that instils some kind of confidence.

In this regard, from an economic perspective, there still seems to be plenty of scope for businesses and individuals to limit the scale of the ultimate damage.

This seems from an economic and financial viewpoint to be quite unlike the situation in autumn 2008. Back then, the global financial system ploughed speedily to the brink of collapse and, in a UK context, Bank of Scotland owner HBOS and Royal Bank of Scotland found themselves on the brink.

History has taught us, looking at the Great Depression as well as the 2008/09 crisis, that recovery from severe downturns triggered by such financial collapses tends to be most unpleasant and protracted.

In the current situation, governments and central banks have been doing absolutely everything they can to bring stability to financial markets and, as we have seen in the UK, to enable companies to stand behind their employees and banks to support their business and personal customers.

Crucially, in the current situation, those businesses with the means to do it have the opportunity to stand by their loyal workforces and try to look through to the other side of this.

The fact that no-one knows when that will be presents a huge challenge, and this will be more frightening in some sectors than in others, but it is important that those who are able do not pull the shutters down.

For those who have less choice, in the likes of the hospitality sector and now general retail, there is in a UK context huge Government support aimed at enabling such businesses to retain staff. They should do so.

Consumer spending will obviously be hit hard by the uncertainty.

Most people’s focus is, for good reason as the coronavirus outbreak intensifies, on the health of family and friends.

However, people will also be worried about their livelihoods. The more support employers can provide on this front, the better.

The problem, in terms of people’s worries about the future, is we are in uncharted territory. Not only that but the deep recession of 2008/09, and in a UK context the miserable decade of austerity that has followed it, is still very much fresh in people’s minds.

Senior Scottish economist Jeremy Peat warned last week, amid the rapid escalation of the Covid-19 coronavirus outbreak, that the current situation was the most uncertain in his 50 years working in this field.

This is a point well made.

Mr Peat, a former chief economist at Royal Bank of Scotland and a previous director of The David Hume Institute, said: “I can’t see any stabilisation – I would hope for [only] a few weeks, but who knows? We just don’t know how long this is going to take.

“It is certainly my most uncertain period in my 50 years working as an economist. This is so difficult for markets, or anyone. No-one can forecast.”

The inability to forecast is evident in gyrations in financial markets, which were on the up in London hours yesterday but are still showing huge losses over recent weeks.

In this volatile environment, some of the observations made, notably those comparing the current situation with past downturns in terms of the likely scale of economic damage, are unlikely to help the fight by governments and central banks to prevent a total loss of confidence.

New York City’s mayor, rightly, cited the Great Depression to highlight the scale of the health crisis that is the coronavirus pandemic.

However, we have had projections of unemployment in countries such as the US climbing to its highest since the early 1930s. And figures showing this has happened in Norway, in which the unemployment rate has surged above 10% from just 2.3% in late February.

The Centre for Economics and Business Research, a UK forecaster, has cited potential for the sharpest peacetime fall in global economic output since the Great Depression era.

All of this presents huge challenges for global leaders in trying to maintain confidence and limit the damage, especially given how evocative Great Depression comparatives are for ordinary people who have read about this period, seen archive photographs or watched dramatisations.

We have also had former Bank of England governor Mervyn King, now Lord King, declare this week that the UK faces a “much more serious” economic challenge now, amid the coronavirus crisis, than in 2008. He gave his view that the current policy challenge and potential economic damage were even greater than what was faced on these fronts in 2008/09, during which the UK suffered its worst recession since the 1930s.

But there is also potential, given decisions by businesses as well as governments will be crucial in terms of preserving people’s livelihoods, for the economic damage to be limited. That is what the huge government and central bank support is aimed at achieving.

The saving of lives is absolutely the right priority just now.

However, we must also hope that those with the power to do so make the right decisions, in terms of standing by their employees.

Such decisions will alleviate the eventual damage to the economy and, crucially, living standards.