UK facing economic 'emergency' - BoE Governor

Andrew Bailey, the new governor of the Bank of England, has called for calm during the growing coronavirus crisis, insisting that firms should think twice before laying off staff.

Bailey, who took over from his predecessor Mark Carney on Monday, conceded that the country was now facing an economic emergency, but that British companies needed to “stop, look at what’s available, come and talk to us [or] the government before you take that position”, adding: “We will be there to support your needs”.

His comments come a day after Chancellor Rishi Sunak unveiled a £350bn package intended to support business during the outbreak, including making £330bn of loans available to affected companies and £20bn of grants. Business rates holidays for retailers and pubs – two of the most affected sectors – have also been promised.

But analysts have voiced concerns the measures do not go far enough, especially for those working in the so-called gig economy.

The Institute of Fiscal Studies, the think tank, said on Wednesday that while the aid package was substantial, it was “probably not well targeted at saving jobs”, with director Paul Johnson noting: “It will remain expensive to pay people and if demand is down, then jobs are likely to go.”

And the hospitality sector has warned that companies could go under after the government advised people to reduce all but essential social contact and avoid pubs, clubs and restaurants. Cinemas, restaurants, theatres and museums across the country have all closed their doors this week in response.

Flights have also been grounded as borders are closed and travel restrictions put in place.

But speaking to journalists on a conference call from a near-deserted Threadneedle Street, Bailey told the BBC that there were “important discussions” going on between companies and the Treasury, and that “supporting the employment and income of the people in this country is critical”.

He also called on markets to behave responsibly, telling the BBC: “Anybody who says, ‘I can make a load of money shorting’, which might not be frankly in the interest of the economy or the interest of the people, just stop what you’re doing.”

He said it was his “strong preference” for financial markets to stay open but conceded he was keeping a “very close eye on the stability of markets and their integrity”. Markets across the world have fluctuated wildly in response to the crisis, with the pound reaching lows not consistently seen since the 1980s on Wednesday and the FTSE 100 tumbling another 2.5% to 5,161.49 by 1430 GMT.

Bailey told the Financial Times the bank was willing to pump unlimited quantities of money into the economy, and would go further if requested by the government. “We are facing an emergency. I didn’t think that three days into the job I would be sitting in a virtually empty building. But we are ready to do whatever we have to," he told The Guardian.

The Bank of England cut interest rates in an unscheduled meeting last week, from 0.75% to 0.25%, and is expected to unveil further measures when the Monetary Policy Committee convenes again on 26 March.