Businesses will need a bailout from government to get over economic ‘shock’ of coronavirus, says new Bank of England chief Andrew Bailey
- The next Bank of England governor Andrew Bailey has given evidence to MPs
- Mr Bailey warned of the impact from spread of coronavirus around the world
- He said there will need to be bailout for companies to help them bear the impact
Businesses will need a bailout from government to get over the ‘shock’ of coronavirus, the new chief of the Bank of England said today.
Andrew Bailey warned there would be ‘damage’ to the economy from the virus, saying small firms in particular would need help.
With a week to go until Chancellor Rishi Sunak delivers the Bidget, Mr Bailey said will have to be ‘supply chain finance’ in the ‘not very distant future’
The comments came as the economist – due to take over from current governor Mark Carney later this month – gave evidence to MPs on the Treasury Select Committee.
Andrew Bailey warned there would be ‘damage’ to the economy from the virus, saying small firms in particular would need help
There is mounting speculation that the Bank will step in to boost the economy as coronavirus sweeps the globe.
The US Federal Reserve announced a surprise rate cut yesterday, and other central banks are expected to follow suit.
Asked about the effects of coronavirus, Mr Bailey – the outgoing head of the Financial Conduct Authority – said: ‘It’s reasonable to expect we are going to collectively have to supply some supply chain finance in the not too distant future to ensure the shocks from the virus are not damaging to many firms … in particular to small firms.
‘We will have to move very quickly to do that.’
He added: ‘It’s quite clear in a situation like this, that we must act in a coordinated fashion.’
He said smaller companies in particular would need support, and quickly.
The UK has been stepping up preparations amid mounting fears of a major outbreak – with the number of cases rising sharply to 85 today.
Boris Johnson published the government’s ‘battle plan’ to combat the spread of coronavirus yesterday.
It suggests that the public will be asked to minimise social contact for around three months in case of mass infections.
Boris Johnson (pictured at PMQs today) published the government’s ‘battle plan’ to combat the spread of coronavirus yesterday
Mr Bailey also stressed the Bank would have to be ‘nimble’ in its response to the coronavirus crisis.
He said: ‘It’s evolving very quickly and in an unprecedented and unexpected fashion.’
Mr Carney warned, in a hearing with the committee on Tuesday, that the economic shock caused by coronavirus could ‘prove large but will ultimately be temporary’.
The outgoing Bank boss also said central banks and governments worldwide were preparing to act and said the ‘collective response will be both powerful and timely’.
The US Federal Reserve cut its interest rates later on Tuesday to help ward off from an economic downturn in the American economy – a move which has also helped stock markets pull out of their nosedive.
It is reported that high street banks are already rolling out emergency loans to firms across the UK amid fears that factory disruptions in China are threatening their supply chains and cash flow.
Barclays, Santander UK and Royal Bank of Scotland have already begun contacting thousands of business customers to check if they are under financial strain and need overdrafts or short-term loans, according to The Guardian.
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