The Week UK - 04.04.2020

42 CITY

THE WEEK4April 2020

Commentators

Whenplans tobuildBritain’sfirstvaccinemanufacturinginnova-

tioncentre wererevealed in2018,no one couldhaveforeseenthe

globalpandemicjustaround the corner,saysHannahUttley.

And that facilitywon’tbe readyuntil2022,raisingfearsthat–

without amajor cashinjection–Britainwillbe attheback ofthe

internationalqueue for vaccines. Some35companiesaround

the worldarenow thought tohaveclinical trialsofcoronavirus

vaccinesinthepipeline,andseverallabshopetohaveaproduct

“readytobe putforwardtoregulators”by the end oftheyear.

Butit’s not just aquestionofcomingup with avaccine thatcan

work.As one investment bankerpointsout,we alsoneedthe

buildingandmanufacturingcapacitytohandleit. Our home-

grown pharmagiant,GlaxoSmithKline–oneofthe world’s

biggest vaccine-makers –doesn’t manufactureimmunisations

in thiscountry,so Britaincurrentlyhasjusttwomajorvaccine

factories, bothnearLiverpool, run by AstraZeneca andSeqirus.

One crystal clear message this pandemic sends out is simply this:

Britain must investmore.“Coronaviruses aren’t going away.”

Britain’sbusinesscommunitymayhavebeen“toocomplacent”

beforethecoronavirushit,saysLukeJohnson,butnowcompanies

andentrepreneursarestretching“everysinew”tostayafloat.

They’re“scrabblingforcashineverycorner”:allbankfacilities

havebeendrawndown.Yet“fewIknowwanttoborrowviathe

variousemergencygovernmentloanschemes”,because“personal

guarantees”arerequired,andnoonereallyknowswhatanything

isworthrightnow,norhowdebtistoberepaid“oncethisagony

isover”.Somecompanies are makingemergencycash-callsto

shareholders. And even FTSE 100 companies are ignoring banking

covenants –somethingthatbefore now firms werefartoo

petrifiedtocontemplate. That perhapsisthemoststriking

measureofhow“wholeindustries are onlifesupport”.In a

“sophisticatedeconomy”,commercialrelationshipsdepend ona

“highdegreeof trust andproperlyfunctioningrule oflaw”. That

isnow goingto betested todestruction.Once the shockwears

off, “Ifear anavalancheoflitigation–contractsbroken, debts

unpaid, everyone lookingtoblameandclaim from someoneelse”.

“Theeconomicfalloutfromthepandemicisstartingtofeellike

2008 reprised,”saystheFT.Onceagain,alleyesareonChina,

thehopebeingthatthecountrycanrevivetheworldeconomy.

ButalthoughChina“appearsontracktostagethefirstrecovery

amongleadingeconomies”,the“unpalatablereality”isthatit

willbeimpossibletoreplicate 2008 .Then,Bei jing“ledtheworld

togrowthbypushingoutamassive$590bnstimuluspackage”

equivalentto13%ofitsGDP.However,ithasrunupsomuch

debtinthecredit-fuelled 12 yearssincethatcrisis,itcanill-afford

anotherbigbazooka.“Nordoesitappearaswillingasitwasin

2008 toidentifytheworld’sproblemsasitsown.”Butifacredit

bazookareallyisoutofthequestion,Chinashouldnothesitateto

pullotheravailablelevers.Ifitwantstoshow“realleadership”,it

should“rampupimportswhilekeepingtherenm inbisteady

againstthedollar”.Theresulting“heftycurrentaccountdeficits”

wouldhelpreviveglobaldemandandofferconclusiveproofof

China’s“contributiontotheinternationalcommunity”.

SportsDirect bossMikeAshley hasanice newlinein“sack-

cloth”, saysAlistair Osborne. Havingoutragedthe nationby

ignoring governmentadvi ce to shut stores, while“jacking up”

prices onhome gymkit by asmuch as 50%, hehasissued a

“meaculp a”. It’seasy tobe cynical aboutthe “carefully worded

apology”that “bigMike” relayedacross thestockexchange,and

hispledge “not to makethe same mistakes”in future –hewas

probablykeen to avoidarepeat ofbeing“drag gedupinfront of

aparliamentary committeeto be grilled onworkingconditions”

at th egroup’s warehouses.Still,actionsspeak louder than

words.To hiscredit ,Ashley has offered toputhis Frasers

Group’s“entire fleet of lorries” atthe“disposal”of th eNHS

and “allkeyworkforcesacross the government”,tohelp deliver

medicalequipmentand othersupplies. “Aslongashe’snot

intendingto charge royally forhis services,it’s adecentgesture.”

For now, thenation’s favourite corporate villain “deserves the

benefitofthe doubt”.

LaxmanNarasimhan

Lotsofusaregettingused

torunningourbusiness

empiresfromhome.Few

arequitethesizeofLaxman

Narasimhan’s,saidThe

Times.ThenewReckitt

Benckiserbosswas

relocatingtoBritainwhen

thecrisishit–andhassince

beenrunning“oneofthe

world’sbiggestconsumer

goodscompanies”from

histwo-bedhomein

westLondon,“whilealso

lookingafterhis79-year-old

mother”.Hiswifeand

childrenare“trapped”

inNewYork.Indian-born

NarasimhanjoinedReckitt

fromPepsicolastsummer,

“partlybecausehehadan

affinity”withoneofits

leadingbrands,Dettol–a

stapleofhischildhood.Sales

ofthedisinfectanthave,

unsurprisingly,soared.

BillAckman

Lessthanaweekafter

warningtheAmericanpublic

that“helliscoming”,the

billionaireinvestorbehind

PershingSquarehascontro-

versially pocketed $2.6bn –

after taking big bets that

firms would struggle to pay

their debts, said Ortenca

Aliaj in the FT. In an

“emotional” interview, the

hedgie, 53, recalled how “he

had become increasingly

bearish in January, after

waking up fromanightmare

about the virus”. His hunch

paid off when some timely

“credit protection trades”

protected Pershing’s $6.5bn

portfolio from “the US stock

market’s fastest-ever bear

market”. Ackman’s coup

topsatriumphant

turnaround after “four

consecutive years of losses”.

Optimists note that, in line

with President Trump, he’s

now betting heavily on US

recovery, ploughing much

of the windfall into shares

of American companies “we

love” at “bargain prices”.

Can China get

us out of this

mess... again?

Editorial

FinancialTimes

Trust is being

tested to

destruction

LukeJohnson

TheSundayTimes

Is Britain at

the back ofthe

vaccine queue?

HannahUttley

TheSundayTelegraph

Give credit to

the nation’s

favourite villain

Alistair Osborne

The Times

City profiles