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A moment of clarity

The ructions in the oil market in fact point to the political dimension that the Covid-19 crisis has now taken on. While it is still unclear just how bad the broad health effects will be, the virus has helped open a Pandora’s box of international tensions and economic fragilities, the effects of which will undoubtedly be felt for some time. The oil market could be just the start.

Right now, though, there is the question of immediate physical and economic survival. The UK is not yet in an Italian-style lockdown, but preparations to try and stem the spread are taking place, including at this magazine. We have plans in place to keep the content coming even without coming to the office – modern technology makes this possible, something investors should consider when the crisis is behind us. That isn’t always feasible, however – unfortunately, we have taken the precaution of postponing next week’s investment trust seminar, which will now take place in June; again, investors should be paying close attention to those businesses where physical proximity matters, and where business simply stops for a while.

That problem has unsurprisingly been at the heart of this year’s Budget, overshadowing other important news around infrastructure and green investment, and a doubling of the Junior Isa allowance, possibly the boldest move to encourage long-term investing seen for years (see page 13). To combat the virus fallout, a package of measures worth £30bn has been put together by new chancellor Rishi Sunak to support businesses, particularly small ones, that could suffer cash-flow issues because of the crisis. The response – which includes cheap loans and business rate cuts – has been coordinated with the Bank of England and an emergency 50 basis point interest cut to a record low 0.25 per cent alongside other measures to support SMEs. It is, to paraphrase Mario Draghi, a whatever it takes moment. 

It is certainly a clear indication of just how worried policymakers are about Covid-19, and hardly reassuring to private investors, who may be struggling to stay calm at this fearful time. That they must do, though, because fear destroys wealth – on page 34 our private investor diarist John Rosier amply demonstrates the value of keeping a clear head at times of stress; along with Phil Oakley’s measured take on the crisis on page 26, we hope that helps you do the same.