It is perhaps not surprising that when Boris Johnson suggested a few months ago that we should all clap for our financiers that it didn’t result in a universal outpouring of public applause across the country for investment bankers, traders, fund managers or small business lending managers. But when you look at the way in which the banking and finance industry has responded to the Covid crisis in the past few months, he perhaps had a point.

In the global financial crisis more than a decade ago, banking, finance and the capital markets were a big part of the problem: think Northern Rock, RBS, Lehman Brothers and the wave of scandals across the industry that followed. This time round, in response to the Covid-19 crisis, they are a big part of the solution in helping dig the UK economy out of a very big and very deep pandemic-induced hole.

The City of London often seems too remote and too complex for most people to spare a second thought as to what it does and why. The industry’s responses to the crisis has underlined that it has a fundamental role in supporting the wider economy, not just in feeding off it.

In the first few months of the crisis, bank lending and capital markets were on steroids as companies rushed to raise money to see them through the pandemic. A recent report by New Financial (the capital markets think tank that I run) analysed the response of the industry to the crisis across Europe, and the numbers in the UK were particularly striking.

Banks are often criticised for not lending enough to UK companies – particularly SMEs – but bank lending went through the roof: the total amount of new loans to UK companies between March and June doubled to around £160bn compared with the same period last year. Net new lending (new loans minus repayments by companies of existing loans) increased to £45bn – around 10 times more than last year and 20 times the average levels of the past five years. This surge in lending over just few months reversed a decade of decline, and the total value of bank loans to the companies in the UK is now back to its highest level since 2010.

Of course, government-backed lending schemes were a big impetus to this increase in lending, but the majority of the surge in activity kicked in before those schemes were up and running and the industry played a vital role in facilitating the government’s unprecedented injection into the economy.

Alongside a surge in bank lending, capital markets (the City or the money markets, or the financial markets – whatever you want to call it) also stepped up a gear. More than 250 UK companies raised another £70 billion or so pounds from the corporate bond and equity markets – a big increase on an already busy 2019. Household names such as WH Smith, Compass, EasyJet, Wetherspoons and Whitbread tapped the capital markets for hundreds of millions or even billions of pounds to see them through the crisis. April was the busiest month in the City for UK companies raising money since the financial crisis. At the same time, despite a big spike in volatility and a surge in trading volumes, markets proved surprisingly resilient. This was all the more remarkable given that at most firms more than 95% of staff were working from home and were trading from their spare bedroom or from their kitchen table helping companies raise money.

These are big numbers but it’s important to boil them down to the level of individual companies: every loan, bond issue or share sale provides money to a real company with real employees. More than 1.2 million companies – employing millions of people in offices, plants, factories and high streets in every corner of the UK – have relied on their banks or the capital markets to raise money to see them through the pandemic. The decisions in the capital markets over which companies to invest in are taken by real people looking after the savings, investments and pensions of millions of other real people across the UK and beyond.

One key message from our research is that while the increase in bank lending activity is welcome, this crisis has shown that having a large and diverse financial system in the UK that combines bank lending with deep capital markets has been a bit like having a “spare tyre” in the back of the car just in case.

That is not the case in much of the rest of Europe: most countries don’t have this sort of “spare tyre” and rely far too much on bank lending from banks that in many cases are still recovering from the last crisis. While the volumes of bank lending increased dramatically across the EU over the same period, funding for companies in the capital markets played a much smaller role in the response to the crisis in the EU. That will place more pressure on a creaking European banking system, and underlines the need for the EU to get its act together in developing bigger and deeper capital markets (a key part of our work at New Financial and a big focus of the report).

It is too early for the industry to start counting its chickens. Patting itself on the back for showing that it has done its job – albeit very well – is a bit like Ocado putting out a press release every time it deliver online groceries on time to the right address. There is still plenty of scope for the industry to screw up: a lot of companies that have borrowed money in the past few months are not going to pay it back and banks are going to find themselves in the headlines for all the wrong reasons once they start to chase them up. There’s a risk that pay and bonuses – the lightning rod for public anger at the City – could become a big political headache again for the industry later this year at a time when unemployment is likely to be growing.

After a strong start, it is now the City’s to lose. How it behaves in the next few years will define the much-maligned industry’s relationship with government and society for the next decade, in much the same way as the financial crisis defined that relationship over the past 10 years. It shouldn’t expect a round of applause, but for the first time in a while it may just have earned the right to be heard.

William Wright is the founder and managing director of capital markets think tank New Financial.

You can read the report on how banks and capital markets have responded to the Covid crisis here.