NEWS 5
14 March 2020 THE WEEK
...and how they were covered
Itwas“thenewBlackMonday”,
saidPatrickHoskinginTheTimes–
theworstdayforglobalmarketssince
the 2008 financialcrisis.Hundredsof
billionsofpoundsofwealthvanished
thisweek;onMondayalonetheFTSE
fellby7.7%,shedding£125bnonits
fifthworsttradingdayever(seepage
53 ).Thesell-offwascausedbyalarm
overthecoronavirusandfearsofanoil
pricewarafterSaudiArabia–angryat
Russia’srefusaltocutproductionata
timeoffallingdemand–slashedpricesandrampedupits
ownoutput.Oilpricesplungedbyupto33%,theirbiggest
fallsincethe 1991 GulfWar.TheBankofEnglandresponded
tothecrisisbycuttinginterestratesfrom0.75%to0.25%on
Wednesday,takingborrowingcostsbacktorecordlows.The
virusisspreading,saidAmbroseEvans-PritchardinTheDaily
Telegraph–andmarketshavewokenuptothe“grimreality”
thatEuropeandtheUShavemissedthechancetocontrolit.
WhataterrifyingbackdroptoRishiSunak’sfirstBudget,said
AlexBrummerintheDailyMail.TheFTSEhasplummeted
by22%sincethe coronavirus beganaffecti ng markets on
20 January. On Monday, things got sobad that the New York
Stock Exchangetemporarily halted trading. Britain’s service-
driven economyis horribly vulnerable to the social distancing
required to combat the coronavirus, and lowmanufacturing
outputleavesusrelianton“stuttering”globalproductionlines.
SaudiArabia’soilpricewaris“dire
news”fortheindustry,saidThe
Guardian.Thecoronavirushasledto
plummetingdemandforoilinChina,
andtravelrestrictionshaveledairlines
tocancelthousandsofflightsasthey
struggletostayafloat.Butthecauses
ofthismeltdownrundeeper.Global
growthhasbeenslowing–Germany,
ItalyandJapanareallclosetorecession
–and“buoyant”markets,boostedby
quantitativeeasing,havedisguised
underlyingweaknesses.Investorsare
wakinguptosomehardeconomicand
politicaltruths,saidNilsPratleyinthe
samepaper.TheUSpresident,ill-equippedtocopewithsuch
acrisis,is“pretendinghe’sanepidemiologist”,playingdown
theproblemasstockstumble.Noteventheeurozonecan
agreearesponse.In2008,investorswatchedas“grown-ups”
workedoutaplanataG 20 summit.Today,alltheycansee
istensionand“opportunism”.Theechoesof 2008 are“deafening”,saidtheFT.Butwhereas
thatcrashstartedinthefinancialsystembeforegoingonto
hitdemand,thiscrisishitthesupplysidefirst.Andmonetary
policyhaslittleeffectwhenfactoriesclose,travelrestrictions
biteand workersstay at home. In 2008,“the antidote was
clear”, said The Times:centralbanks useda“bigbazooka”
of liquidity, rock-bottominterestratesand cash toreassure
markets. This time, theonly“bazooka”availableis avaccine,
whichscientists reckon is 12 to18monthsaway. Hopes of
avoiding a“full-blown financial crisis” are fading fast.Like 2008 all over again, except deadlier?
A new crash?
“I can say hand on heart that ifIwas going to be inacountry which
had apandemic,Iwould choosethe UK.” So claimed the former
health secretary Jeremy Hunt inarecent article. Britain has done
extensive contingency planning foracoronavirus-style scenario, he wrote, and its centralised
healthcare system is well suited to delivering an integrated and coordinated response. Hunt has
apoint. The NHS may be under huge pressure, but compared with many nations, particularly
developing ones in Africa with precarious healthcare systems, the UK is enviably placed to deal with
the logistical and medical challenges ofafull-blown coronavirus epidemic, should it come to that.
Whether the British public is ready is another matter. How would we respond to having our
freedom of movement curtailed and to the other drastic measures introduced in Italy this week?
We pride ourselves on beingastoical, uncomplaining people, and this was true of us in the past. As
Helen Rumbelow noted in The Times, Britain’s response to the 1918 flu pandemic was, if anything,
too calm. The disease wasn’t even discussed by the cabinet untilalate stage of the crisis, after the
virus had almost claimed the life of the prime minister, David Lloyd George. Punch magazine said
at the time: “Those who insist on having the influenza do so at their own risk.” But to what extent
does Britain remainanation of phlegmatic, cheerful queuers, as opposed to one of loo-roll-
hoarding hysterics? We could learnalot about our society in the coming weeks.THEWEEK
Harry Nicolle
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Ed itorialchairman and co-founder:Jeremy O’GradyLatelastmonth,Moderna,abiotechcompany
basednearBoston,“smashedtherecordfor
thefastesttimebetweenidentifyingavirusand
creatingavaccinereadytotestinhumans”,said
theFT–creatinganexperimentalinoculationfor
theCovid-19virusinjust 42 days.Thegoodnews
isthatmorethan 20 companiesandinstitutions
areracingtocreatevaccines.Thebadnewsis
thatitwillbe“atleastayearbeforeoneis
availableforwidespreaduse”.Few firms have the resources to make vaccines,
said Carolyn Kormann in The New Yorker. And
fewer still are willing to do so. The process is slow
and complex, and at the end there may not even
be amarket, because the epidemic has petered
out. Recently, there have been concerted attempts to solve
this market failure: the Coalition for Epidemic Preparedness
Innovation (funded by grant-giving foundations) has invested
$19m in Covid-19 vaccines. Even so, there are many obstacles,
said Megan Molteni in Wired. Vaccines work by exposing theimmune system toasmall dose ofapatho gen,
so thebody learns to defend itself against attack.
“The trick is to do this without making the person
seriously ill.” In the past, viruses were isolated
and grown in the lab, which took years; today,
genetic sequencing makes creating vaccines
much quicker. The “real bottleneck”, though,
comes with clinical trials. The first trial, with a
small number of volunteers, ensures the vaccine
is safe; this takes up to three months. If it clears
that, several hundred will get the shot, in an area
suffering an outbreak, to see if it works, over six to
eight months. Phase three means repeating that
process. Realistically, even producingavaccine
by mid-2021 will be “a Herculean endeavour”.We’re likely to have an effective treatment before
we haveavaccine, said Hannah Devlin in The Guardian. The US
biotech firm Gilead Sciences is already running clinical trials with
remdesivir, an anti-viral it originally developed to treat Ebola.
It has already been effective against two similar coronaviruses,
Sars and Mers–and is seen as “one ofthevery few drugs that
has areasonable prospect of helping patients in the near-term”.Thesearchfor avaccine
PM: has promised investment