Last week, the British economic and financial system came very close to breakdown. An extraordinary number of companies were, and are, in acute financial distress, threatening mass lay-offs and the cessation of swathes of economic activity. There was an almost complete collapse in investor confidence, with attempts to sell every financial asset – even high-quality government bonds – in a desperate quest to hold cash. Such was the loss of generalised faith in the integrity of the system that the governor of the Bank of England, Andrew Bailey, came close to shutting the financial markets.

The scale of the incredible drama – much more acute than the financial crisis of September 2008 and still unfolding – only commanded half our attention. Most eyes understandably were focused on the march of the coronavirus and the missteps and miscommunications of a prime minister unsuited for the leadership demands of high office.

The confusion and growing public panic at the uncertain response was amplified manyfold in the financial markets, matched by fear and uncertainty in the real economy that produces the goods and services we want and need. The Treasury and the Bank of England stared into an abyss. Thankfully their officials, derided by the cabal of second-rate ideologue advisers at Number 10, were up to the task.

Here Boris Johnson – and the country – got lucky. The Conservative party, broken by the triumph of anti-EU ideology and the wilful disregard for fact that is the hallmark of the Brexiter mindset, now offers the weakest talent pool in its long history. But the chancellor, Rishi Sunak, is an unexpected outlier. Officials report that he is proving highly intelligent, economically literate, agile and with acutely sensitive political antennae. Thus the unprecedented interventions last week – with much more to come in the weeks ahead.

Business cannot prosper without buyers for its products: the good health and predictable income of workers are vital

Even as I write, the Treasury and the Bank are in urgent talks to organise bailout packages for a number of top companies (including, but not only, airlines), sometimes taking government share stakes along the lines of the bailout of RBS in 2008.

But it was only last Monday that the government genuinely thought that if it stood behind business with a massive programme of soft loans, with grants for hard-hit sectors, it might escape without having to go much further. It did not need to sully its hands with un-Tory propositions – underwriting worker incomes together with improved benefits for those thrown out of work.

However, the crisis of confidence in the financial markets and intense lobbying by the CBI and the TUC soon changed minds, none faster than the initially sceptical Sunak. After all, business cannot prosper without buyers for its products: the good health and predictable incomes of the working population are vital. The last vestiges of Thatcherite individualism are being torched. Social partnership is back with a vengeance

Meanwhile, the top echelons of the Bank of England witnessed the consequences of the outbreak as mounting panic in global trading hit British markets badly, all magnified by Johnson’s bumbles. The sterling crisis expected with a no-deal Brexit was brought forward: a currency dependent on the “kindness of strangers”, given the scale of Britain’s monumental international balance of payments deficit, was in near freefall. There had to be a twin response: a fiscal one that “would blow the bloody wall down” and a shock-and-awe monetary intervention to try to steady shattered bond markets.

The Bank moved first, committing to a £200bn programme of printing money to buy bonds (quantitative easing) and cutting interest rates to a symbolic 0.1%. For the moment, the markets have steadied. Then came Sunak’s measures, the centrepiece of which was the commitment to pay 80% of the wages (up to £2,500 a month) of workers threatened by lay-off. He also ratcheted up support for renters and those on universal credit.

Two million people working in the now shut hospitality sector will be immediately eligible, along with up to five million more as the economy contracts by at least one fifth in the months ahead, with the expected package for the self-employed adding yet more. At its peak, the cost per month will exceed £25bn and the scheme will plainly need extending. The budget deficit in 2020-21 will comfortably exceed £200bn, to be financed, if necessary, by the Bank of England printing money. There are no other options. One privy to the policy told me that even at the last they were unsure whether Sunak “had the balls”. He did. It is what had to be done – and is being reproduced across Europe and North America.

Johnson is too divisive a figure, too thin-skinned and too unserious to lead

It is wartime finance for wartime economic conditions. Over and above the multiple bailout packages currently being negotiated will come state direction and manufacture of vaccines, key medical products, respirators, and the takeover of private hospitals. Key workers – in the NHS, police, transport and food supply chain – will have to be marshalled in their millions and their wellbeing and health protected. Rationing of key foodstuffs will need to be imposed. The only way to head off a full-scale collapse of sterling and protracted economic depression will be to defer Brexit for at least a year or, as one source told me, five years. Government communications will have to be infinitely more sure-footed. The government itself has to be 100% trusted.

The open question is whether Johnson’s government, with its “frighteningly weak” core at Number 10, as one insider reported to me, can do what is necessary. If not there will, as in wartime, have to be a national government (headed by Sunak with Keir Starmer as his deputy). Johnson is too divisive a figure, too thin-skinned, too unserious in his messaging and with too divisive a history, to lead.

Sunak and Starmer offer competence and humanity above ideology. Whether through the deferral of Brexit or smart and well-thought-through state direction of the economy, they will do what is needed to get us through. In the meantime, take social distancing seriously. Be one of those who put society and social obligations first. And stay safe.

• Will Hutton is an Observer columnist