Leading City of London financiers have called on governments around the world to step up efforts to tackle the coronavirus outbreak.
Many of the FT City Network — a forum of more than 50 senior figures — also called for international co-ordination on fiscal policy to help economies bounce back from the epidemic as they warned the worst may not yet be over for global markets.
Win Bischoff, who chairs JPMorgan Securities, said he wanted to see further efforts to contain the virus, adding that “restrictions can always be lifted proactively”.
He said: “Just as the markets were very high before, Covid-19 may turn out to be the catalyst to cause them to fall too far. The impact on GDP this year will be substantial and in real financial terms close to terminal for some companies in highly affected industries.”
The response by governments has been mixed, largely depending on the extent of the outbreak. Italy, the country hit hardest after China, has taken the extreme measure of locking down the whole country. In contrast, the British government remains in the “containment” stage and has not yet introduced measures such as “social distancing” to delay the spread of the disease.
Meanwhile, Spain on Tuesday said it was closing down parliament and halted large scale gatherings in some of the hardest hit areas.
Jean Pierre Mustier, head of UniCredit, agreed that “containment at scale is the only way to limit the spread of the pandemic” — but pointed to the need for support for the population through remote schooling and help to older people.
He said it could not “be ruled out that the pandemic will end up having a very serious long term impact on the world economy, which could lead to a major social crisis. We are not there yet, and we can still do everything to avoid it”.
Many countries have already moved to stimulate economies through rate cuts, state aid or reducing the burden of debt as the coronavirus outbreak has worsened, hitting companies and markets as the death toll has risen. The impact worsened this week after oil price war broke out between Saudi Arabia and Russia.
Anne Richards, who heads Fidelity International, said that “recent market highs disguised an underlying fragility that has been exposed by a double whammy of the coronavirus and an oil shock”. She urged governments to “hit capital markets with effective and co-ordinated stimulus” while protecting the health and safety of the population.
Mervyn Davies, chairman of private equity group Corsair Capital, said: “This is likely to get much worse before it gets better and certain industries will face extraordinary challenges,” adding: “There will be a material impact on the global growth numbers and our focus has to be on limiting the spread and limiting the damage.”
The City Network agreed that better co-ordination was needed, with Mr Mustier calling for joint action by governments — not just central banks — on fiscal policy.
Ann Cairns, vice-chairman of Mastercard, called for greater support for some of the harder hit sectors, such as airlines. She also highlighted the need for social measures, such as ensuring temporary income for zero hours workers in the gig economy.
