Shelve the brickbats: companies will need our help

Nobody likes a bail-out. Those on the Left say that government intervention to prop up failing businesses highlights the extent to which the game is rigged, with gains being privatised while losses are socialised.

Those on the Right say bail-outs prevent free markets from working as they should: rather than creative destruction, red in tooth and claw, what you get is ersatz capitalism, defanged and neutered.

Those of all political persuasions worry that bail-outs can introduce a moral hazard, prompting companies to take riskier bets than they otherwise would safe in the knowledge that if something goes wrong the Government will throw them a lifeline.

These arguments are all valid. But they need to be shelved for the time being.

The global economy has just hit a brick wall. We are about to suffer a juddering slowdown in activity. Legions of businesses – big, small, healthy and badly run – will almost certainly go to the wall unless the Government steps in to help.

As coronavirus spreads around the world, people are going into lockdown – either because they have been told to by their governments or of their own volition. They will not be taking flights, they will not be going on holiday, they will not be going shopping, they will not be eating out or grabbing a coffee.

Many of the businesses that offer those services will struggle to survive. As will their suppliers. And their suppliers’ suppliers. These are all otherwise healthy businesses. They are employers and taxpayers. They are the backbone of this country and, in their hour of need, they must be extended the hand of help.

What they are categorically not is Northern Rock, HBOS or Royal Bank of Scotland in 2008 – companies that grew fat on their own hubris and had to be bailed out because their collapse would have plunged us all into the abyss.

Yesterday, the German government announced that it would offer unlimited loans to any company of any size that gets hit by coronavirus and allow them to defer billions of euros in tax payments.

Olaf Scholz, the country’s finance minister, described the move as a big “bazooka” to avert a crisis in the Eurozone’s largest economy.

The UK Government must now match that pledge and commit to similar fiscal firepower. There will be discussions about how – or even if – those loans will be repaid and about what it will do to the Government’s already precipitous debt pile if they are not.

There will be rigorous post mortems in which it will be found that the Government has propped up businesses that would have failed regardless of a global pandemic. Some of the money will find its way into the wrong pockets.

That can all come later. The good that will be done will far outweigh the bad. Entirely blameless, well-run companies that generate the jobs and livelihoods of millions will be saved.

The ideologues should down tools and take a few weeks off, along with the rest of us. All of our energy should be focused on plugging the holes that will soon start appearing in the finances of vulnerable households and businesses.

This is not moral hazard. On the contrary, it is a moral imperative.

‘Ideologues should down tools and take a few weeks off, along with the rest of us’