No one would dispute that as Bermuda grapples with the prospect of the arrival of the Covid-19 coronavirus that the health and wellbeing of its residents must come first. Clearly, it is the responsibility of the Government and health authorities to take all steps necessary to contain and prevent the spread of the virus with minimal infections and loss of life. However, it is also clear that these steps may well have a dramatically negative effect on people’s livelihoods and on the general economy, as tourists stop visiting and businesses either close their doors or reduce their activities and staffing levels. There is a risk in that damage from fear of the pandemic could turn out to be worse than the pandemic itself, with the caveat, of course, that life and safety must always come first. Nonetheless, there is a danger that fear of an economic downturn could lead to an economic spiral, which, once begun, will be very difficult to arrest because business decisions have knock-on effects. This sapping of confidence works like this. Cruise ship visits are cancelled, as has already happened.A retail store closes its doors and sends its staff home, in the knowledge that the cancellation will result in no business for the store. Because the staff are no longer working or, in many cases, getting paid, surrounding cafés and restaurants that used to sell them lunch lose business. At the same time, the employee cuts back on grocery shopping, rent payments and the like. That income loss then causes the cafés, grocery stores and so on to cut back. The landlord delays the house-painting job that was planned and delays payment of land tax. As a result, the hardware store loses income and lays off staff and the Government has to borrow more, thus incurring more interest payments. And so it goes.Even financially sound businesses that take the justifiable decision to have staff work at home can have an impact. Suddenly, the need for office supplies drops. Again, cafés and restaurants see their clientele disappear. Fuel sales drop as people stop driving. Soon these businesses are sending staff home as well. Each decision is, on its merits, sensible. But, taken together, the impact can be disastrous. Former US Treasury Secretary Larry Summers compared it to people in a theatre audience standing up: When one person stands up to get a better view, this causes the people around them to stand up and so on. By the end, no one can see. Bermuda lived like this at the beginning of the recession, but it is likely to repeat it now, unless certain steps are taken. The first is that there has to be a recognition that, while no one knows how long the Covid-19 crisis will last, it will not last for ever and that panicking will make it worse, not better. The second is the need for large financial institutions to move quickly, to assure their business customers that they will not be penalised for short-term financial problems.This could include delays in making loan payments or paying health or other insurance premiums. The banks have made some welcome moves in this direction by reducing base interest rates, although some of these not being met for six weeks or more, is unhelpful. Making short-term lines of credit available for small businesses, often the companies with the smallest cash reserves, would also be beneficial. Ideally, these lines of credit could be guaranteed by the Government and could be screened through the Bermuda Economic Development Corporation. The Government can play a further part. It has already been suggested that it should delay the deadline for payroll tax payments from April 15.It could also ease requirements for financial assistance for employees who find themselves on reduced or no hours, or are forced to stay at home with children in the event that schools close or because of self-isolation requirements. People without health insurance need some certainty that, if they contract Covid-19, they will be treated at no cost. The Government and business leaders also need to start planning for when Bermuda reopens, and it will. The Bermuda Tourism Authority and the Bermuda Business Development Agency need, in conjunction with their industry partners, to launch a “Bermuda is Open” campaign that will kick-start the economy after the inevitable retraction. The Government can also inject stimulus into the economy through minor building projects and tax breaks. Certainly, all of this will cost money and Bermuda is in a far from ideal position to weather this storm or to make the necessary investments, to stage a recovery.In the short term, Bermuda will have to borrow more, and may have to do so in a world economy where credit still will be tight. In the medium to long term, now more than ever, the island must act on the recommendations of organisations such as Bermuda First. Some of these might have been politically unpalatable before the recession, but necessity should make the Government do what at least some of its members already know is the only solution for Bermuda, and the Opposition should put any thoughts of political advantage aside and join hands with them, to get Bermuda through this national crisis.