The fatality rate will soar. Hundreds of thousands will suffer long-lasting damage to their health. And our public services will be overwhelmed by the strain on the system.
It might sound like the latest alarming forecast from the epidemiologists at Imperial College, or from Sage, or from one of the other expert groups arguing to put the country back into lockdown. But actually it is a description of another type of “excess deaths” – corporate failures.
We already guessed that closing down the economy for another month or two would be terminal for many small businesses.
Even with extra support from the Chancellor, there are going to be plenty of companies that decide it is simply not worth struggling on through an endless cycle of circuit breakers and closures. How many exactly? We won’t know for sure for another year or two.
But a study by the Federal Reserve in the United States suggests firms are already closing at 50pc above the normal rate. If the UK is similar, and there is no reason why it shouldn’t be, we should expect lockdown to close 250,000 businesses.
Is that worth it? It is not an easy question, and everyone is entitled to an opinion. And yet at the very least, we need to be honest about the numbers, and debate that – and more seriously than we are doing right now.
Eight months into the Covid-19 crisis, we have already seen a huge number of businesses going under. EWM Group, which owns the Austin Reed and Jaeger brands, is close to administration. The shirt maker TM Lewin has gone under. So is the books wholesaler Bertrams, and the furniture retailer Harveys. The list goes on.
Over what now looks like being a long and difficult winter, and a washout Christmas, there will no doubt be many more casualties.
We had grown used to a few retailers collapsing after the festive season, but this year they may bring it forward and start closing in early December. It would be hard to blame any entrepreneur or business owner who decides to give up.
Right now, it is hard to see the point of furloughing staff and haggling over rent and rates postponements, when you have no idea when you can reopen and trade normally. Why not simply throw in the towel, and restart when this is all over?
The key question, however, is this: how many businesses are we going to lose? In the US, the Federal Reserve has just released a fascinating study that attempts to address that very issue. It takes time to officially close down a company, so there is no point looking at the formal statistics. They will be at least a year out of date.
So instead the Fed took real-time data such as the number of electricity accounts (a closed gym doesn’t need power) and credit card accounts (a bankrupt nail salon doesn’t need Visa anymore) to generate estimates of the number of establishments that have stopped operating.
In a normal year, about 7.5pc of American businesses leave the market. That is just the normal ebb and flow of commerce.
Some companies close, and new ones get started. The study therefore calculated the “excess closures”, in much the same way health officials look at the “excess deaths” from Covid-19 (because, after all, people used to die even before the epidemic).
The results? Terrifying. The Fed study estimates “excess closures” are running as high as 50pc above normal in industries such as restaurants, and in many others as well, with the mortality rate especially high among small firms.
We can translate those figures to the UK. The comparison isn’t perfect. But they are also roughly similar, and of course our lockdowns have been far stricter than theirs, so if anything our figures will be worse. We have already seen business investment plummet as a result.
In the UK, there are 4.2m companies, according to Companies House data. Last year there were 508,000 dissolutions; that is, companies that closed down.
If we assume elevated levels of closures at a similar level to the US, we will lose 50pc more companies than usual. The total? Lockdown will lead to 250,000 businesses shutting down. And that is just this year.
That number might be out by a few thousand. But it will be roughly accurate. While a few of those casualties may be huge – it is hard to imagine all the airlines will be able to hang on for example – most of them will be small businesses.
Most won’t make many headlines. If they have already effectively been shut for six months then it is possible few people other than their owners and staff will really notice when the company formally winds itself up. And yet each one destroys years of hard work, sacrifices connections and contacts, rips out part of a local community, and costs jobs that would otherwise have been perfectly viable, and might be very hard to replace.
We spend a lot of time obsessing over “excess deaths” caused by Covid-19. There are graphs, charts and projections. But lockdowns are also causing “excess deaths” among companies.
At the very least, the Government should be publishing those figures every week as well, and collecting real-time data so that we know what the figures and the trade-offs are.
And then perhaps we can have a proper debate about how much of the economy we are willing to sacrifice as we battle to suppress the virus – because at the moment we have very little idea, and by the time the official data is available it will be far too late to do anything about it.