Any other business

Along, cold weekend brought a haul of business news more bad than good. The worst was from aero-engine maker Rolls-Royce, which announced a £5.4 billion half-year loss — adverse currency movements plus a collapse in new orders and engine-repair work — and warned that in the ‘plausible downside scenario’ of an extended slump in global aviation, the company might cease to be a ‘going concern’. That’s a horrendous prospect for what’s left of British engineering. And unlike recent losses on a similar scale at BP, there’s no consolation in terms of long-term repositioning of the business: in short, the fewer jets flying, the grimmer Rolls’s future.

Doing the math, as the Americans say, became this column’s theme after I abandoned another planned trip to France. Seven days in the Dordogne (where last week’s Covid infection rate was just 2.9 cases per 100,000) would have cost me 14 days lockup on return, so I spent the weekend doing arithmetic instead. As I tried to calculate the real cost of what I have called ‘kneejerk quarantine rules driven by focus-group fear’, my notebook began to resemble a rogue Ofqual algorithm — but here’s the simplified version. Let’s start with the 600,000 Britons reportedly caught by the quarantine returning from Spain last month and the 150,000-plus in France who missed last Saturday’s 4 a.m. deadline.

When I worked in the Malaysian capital of Kuala Lumpur long ago, my office looked across Jalan Tun Razak, a boulevard named in honour of the country’s second prime minister and ‘father of development’. This week his son Najib Razak, its sixth prime minister (2009-2018), was convicted of charges relating to the disappearance of $4.5 billion from a sovereign wealth fund called 1MDB which he once controlled. More trials await, but 1MDB may go down not only as the world’s biggest corruption scandal but also the most vulgar — proceeds that might have helped Malaysia’s poor having been frittered on private jets, penthouses, parties in Las Vegas and the financing of The Wolf of Wall Street.

John Maynard Keynes looks down and smiles, recalling his own perhaps too-often quoted remark that ‘when the facts change, I change my mind’. Boris Johnson’s £5 billion ‘New Deal’ of school and hospital projects to stimulate the pandemic-torn economy is pure Keynes, as well as a conscious reference to Franklin Roosevelt. And like the totality of the Treasury response to Covid, it represents a 180-degree change of mind from the modern Conservative belief in squashing state spending while letting the private sector drive. But in dire circumstances, most commentators accept it’s right to park ideology and try anything that looks like it might work.

Do stock markets foretell the future while politicians fudge and economists mumble? No: share prices collectively have a life of their own — driven by herd mentality, weight of money and the available range of investment choices — which indicates little more than the simple fact that what goes up must one day come down and vice versa. Both the FTSE100 and America’s S&P500 indices lost a third of their value between late February when the pandemic began to look serious and a month later when the rate of virus transmission was at its height. So far, so logical. But since then, both have sustained rallies that defy all public and corporate pessimism. Now, just as shops and factories are reopening, both markets look ‘overbought’ and wobbly again.

All logic suggests that the 14-day quarantine for arrivals from abroad really is, as Michael O’Leary of Ryanair put it, ‘a political stunt’. The best explanation is that it was conceived in Downing Street — with minimal consultation, unless someone rang Armando Iannucci, writer of The Thick of It — as a sop to focus-group xenophobia and parental anxiety, as well as a show of grip after the Dominic Cummings debacle. Its absurdity is highlighted by news that the West Indies cricket squad is now quarantined, while 122 high-goal polo players were reported to have beaten the deadline by slipping in last Saturday on a charter flight from Buenos Aires via the Covid cauldron that is São Paulo in Brazil.

Should the government be prepared to take equity stakes in major companies that will struggle to survive the current crisis? That’s a question already on the table in relation to Jaguar Land Rover and Tata Steel, and likely to arise for British Airways, aero engine maker Rolls-Royce and others. We’re told Chancellor Rishi Sunak is working on a plan, called Project Birch, to bail out ‘viable companies which have exhausted all options’ and whose collapse would ‘disproportionately harm the economy’. That means large-scale loan support first, with conversion to equity as a last resort — and to some pundits it smacks of the 1970s interventionism that left swathes of under-performing British industry addicted to state subsidy.

The Royal Mail worker who rang my bell to deliver an Amazon package on Friday was wearing a glittery ball gown because she and her colleagues were fundraising for local hospitals: ‘Two thousand quid so far,’ she said cheerily as she accepted my donation and thanks. But if I had asked her what she thought of the performance of her ultimate boss Rico Back — chief executive of Royal Mail until his sudden departure after less than two years in the job — I suspect she might not even have recognised his name, so remote has this German-born, Swiss-resident big shot been from the front line of his organisation’s role in keeping us all in touch with each other during the lockdown.