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Coronavirus: Bank of England warns of ‘sharp’ virus hit as stocks resume slide

The Bank of England has warned of possible longer-term damage to the economy from the coronavirus crisis.

It issued its latest commentary on the effects of the disruption from COVID-19 as its rate-setting committee maintained interest rates at their joint-record low of 0.1% following two earlier emergency cuts this month.

It spoke up just before US government figures highlighted the pressure on economies from lockdown conditions when it revealed 3.3 million people claimed jobless benefits in the past week – shattering American records.

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The figures were likely to be seen as a wake-up call as the US is the last major economy to agree a major government relief package.

Donald Trump’s $2trn rescue plan has hit political headwinds in its path through Congress but cleared a Senate vote overnight.


The package includes $58bn for the mostly-grounded airline industry – split between grants and loans to cover pay cheques – with companies drawing support unable to cut staff until the end of September or change their labour agreements.

Crisis-hit Boeing, already reeling from the grounding of the 737 MAX, gets $17bn.

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It is understood most Americans would qualify for cheques of up to $1,200 each.

The package has dominated investor sentiment for the past two days.

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After a jittery finish to trading in the US on Wednesday, the Nikkei in Tokyo was 4.5% down amid falls across Asia though the Dow Jones on Wall St rose 6% as the dire jobless claims numbers bolstered investor hopes that more relief measures would be offered globally.

In London, the FTSE 100 Index ended the day more than 2% up at 5,815 despite the Bank of England, as had been widely expected, making no further policy shifts at the latest meeting of its monetary policy committee.

Image: Andrew Bailey took over as governor of the Bank of England on 16 March

In addition to the earlier rate cuts, it has already also boosted its bond-buying programme by £200bn, in a baptism of fire for new governor, Andrew Bailey.

It said on Thursday that it stood ready to expand its purchases of UK government and corporate bonds should it be deemed necessary.

A summary of the meeting said: “The spread of the disease and the measures that are likely to be needed to contain it have evolved significantly.

“The economic consequences of these developments are becoming more apparent and a very sharp reduction in activity is likely.

“Given the severity of that disruption, there is a risk of longer-term damage to the economy, especially if there are business failures on a large scale or significant increases in unemployment.”

Image: Intu also owns Manchester’s Trafford Centre

Of UK companies reporting new coronavirus updates:

Intu Properties, the owner of shopping centres including Lakeside in Essex, confirmed a story by Sky News when it reported that 71% of its rental income that was due to be paid by tenants on 25 March, had been withheld.London office and UK retail site owner British Land said it was supporting its store tenants, such as those in its Meadowhall centre in Sheffield, with rent deferrals totalling £40m. The group suspended future dividend payments and construction work at its key London development sites.Topps Tiles, the specialist tiling retailer, said it was trading online only – reporting a 3.1% fall in like-for-like sales in the 12 weeks to 21 March. It withdrew financial guidance for the full year.Lloyd’s of London, the insurance market, said it was in a “strong position to respond to the impacts of COVID-19” with net resources in 2019 topping £39bn and a return to profit for the year, hitting £2.5bn.Dixons Carphone, which recently announced the permanent closure of its Carphone Warehouse stores in a move unrelated to the crisis, said demand for working from home technology had lifted online sales in electrical goods by 23% in the past three weeks.

In a separate development, regulators said listed companies would be given an additional two months from the end of their financial years to publish their audited financial statements.

The Office for National Statistics also published retail sales data for February showing a flat performance.

Wet weather was blamed while there was also a delay to the shipment of popular goods from China as the country fought its battle against COVID-19.


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