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Bank of England warns of 'large and sharp' UK downturn

Last Updated Mar 26, 2020 at 5:36 am PDT

FILE - In this file photo dated Monday March 16, 2020, The Bank of England Governor Andrew Bailey poses for a photograph at the central bank in London. The Bank of England slashed its key interest rate to 0.1%, on Thursday March 19, 2020, its lowest-ever level, amid global economic turmoil sparked by the coronavirus pandemic. For some people the COVID-19 coronavirus causes mild or moderate symptoms, but for some it causes severe illness.(Tolga Akmen/AP, FILE)

LONDON — The Bank of England has warned that the scale and duration of the economic shock stemming from the coronavirus pandemic will be “large and sharp but should ultimately prove temporary.”

The rate-setting Monetary Policy Committee said in a statement Thursday that the scale of the downturn will largely depend on whether job losses and business failures can be “minimized.”

Early surveys of the economy in Britain are pointing to a virus-related downturn even deeper than the one that followed the global financial crisis a decade ago.

Like other central banks around the world since the pandemic spread viciously over the past few weeks, the Bank of England has slashed interest rates, reducing its main one to 0.1%, its lowest level ever. It has also expanded its bond-buying program by 200 billion pounds ($240 billion) and is offering hundreds of billions more in cheap loans to businesses.

Many of the measures have been done in concert with the British government, which has ramped up spending and launched an income guarantee scheme for workers if their companies retain them rather than lay them off. A further scheme for Britain’s roughly 5 million self-employed workers is expected to be announced later by Treasury chief Rishi Sunak.

The Associated Press