Covid-19 pandemic poses the ultimate arbitrage

In just two weeks, the economy has crashed with horrific consequences at every level.

The property industry has been particularly devastated. Tenants cannot, or more likely are choosing not to, pay the March quarter because they need the money for more urgent priorities. Very few will now be able to pay in June, never mind start to deal with the arrears.

Homes can neither be sold nor bought and construction has effectively ceased. Those pictures of crowded tube trains were of mainly Eastern European men travelling to building sites not because they wanted to or thought it wise but because the only way they got paid was to turn up.

Landlords have been turned into banks – often driving them into near bankruptcy themselves. The banking community itself has failed to deliver what the country needs not only for the property industry but more widely. Some have been accused of attempting to profit from the crisis by offering commercial loans rather than those supported by government.

The government and the governor of the Bank of England have said they will do whatever it takes, but the reality is that far too little of the money chancellor Rishi Sunak announced has actually been taken up. Nor is the damage now capable of being rectified in a week or two, whatever the government decides about the future of its lockdown strategy.

The Federation of Small Businesses has warned that millions of small businesses could collapse in weeks without a cash infusion.

The thick of it

The economy is headed for deep recession and the jobless numbers are rocketing. A million people have applied for unemployment benefit in the last fortnight. The money the government has made available is just not getting to where it needs to get to fast enough and the consequences are horrific.

It turns out working from home is fine if you can, but even those of us who largely can are watching customers and clients fading away fast. When the Queen referenced the challenges of the Second World War in her speech to the nation, we knew what she meant. This is a war against an unseen, more insidious enemy and we are well and truly in the thick of it.

All of this stems from the government’s decision to flatten the spread of the virus so our health services can cope with the volume of patients at any one time. This is a laudable and reasonable aim, echoed in most democracies around the world. But its consequences are only now becoming evident and they are in their way equally horrific.

The economy is headed for a deep recession and the jobless numbers are rocketing

Steve Norris

And so to that uncomfortable but necessary debate about the ultimate arbitrage. That truly wise man Lord Jonathan Sumption QC said recently that we as a society were perhaps too scared of death. He referenced far worse past pandemics from Spanish flu to bubonic plague, when previous generations adopted a much more phlegmatic approach to death, and he posed a straightforward argument that we may now be guilty of producing a cure that is worse than the disease.

The evidence, uncomfortable to many, is that he may well be right. This is not to minimise the risk that Covid-19 poses. It can and will continue to kill many people throughout the world for months if not years.

Irreparable damage?

But the damage we are now inflicting on this and future generations, the damage that we are causing to businesses great and small in every corner of the Earth, should surely cause us to pause and ask whether, in the end, the ultimate arbitrage, between a higher mortality count and an economy and wider society that will be seriously, perhaps irreparably, damaged within a very few weeks is a challenge we will all have to face.

Neither course will be without genuine pain and suffering. But it is a decision that has to be made. And that decision will mark out our fate and that of our children for decades to come.

Steve Norris is chairman of Soho Estates and This Land