Mark Carney today said the Bank of England stood ready to help businesses and households through an economic shock caused by coronavirus – as the embattled FTSE rose 2.19% to 6,800 in its second consecutive day of growth.
The Bank’s outgoing boss told MPs on the Treasury Select Committee that policymakers stand ready to ‘act as appropriate’ to support the British economy and financial system.
‘The Bank of England’s role is to help UK businesses and households manage through an economic shock that could prove large but will ultimately be temporary,’ he said.
‘The Bank will take all necessary steps to support the UK economy and financial system, consistent with its statutory responsibilities.’
He added that he has been holding a series of discussions with the Chancellor over the issue and said the Bank is ensuring ‘all necessary contingency plans are in place’.
His comments came as world stock markets rebounded again, with the FTSE 100 up 2.19% at 6,800 points at 10am and the domestically-focused FTSE 250 also rising 2.23% to 19,877.
Mark Carney told MPs on the Treasury Select Committee that policymakers stand ready to ‘act as appropriate’ to support the British economy and financial system
The blue-chip index increased ahead of a G7 central bank conference call of governors and finance ministers that is expected to deal with the outbreak. Pictured is the FTSE over a five-day perspective
At 8.30am, the domestically-focused FTSE 250 also rose 2.23% to 19,732. This graph also shows its progress over five days
Yesterday, the OECD said it feared the worst financial crisis for a decade due to the impact of coronavirus.
The trade body warned that the world’s economy could shrink in the first quarter of this year as a result of the outbreak, with growth across the whole year dipping as low as 1.5% if the virus lasts long and spreads widely.
It came as the Bank of England vowed to take ‘all necessary steps’ to protect Britain’s economy.
London’s FTSE closed yesterday up 1.1% at 6,655, following the trend of the world’s blue-chip stock markets which mostly saw small increases.
The increase came after the FTSE at lunchtime dropped to -0.7% after early gains lessened through the morning, before gaining again to reach growth of 0.64% at 3.30pm.
It comes after British firms had more than £250billion wiped off their value last week amid the fallout from coronavirus.
Face masks have become an increasingly common sight on the streets of London as concern about coronavirus rises
A slowdown in demand caused by coronavirus could cause the world economy to grow by just 1.5 per cent this year, nearly half the rate of growth of 2.9 per cent previously forecast.
‘A larger decline in growth prospects of this magnitude would lower global GDP growth to around 1½ per cent in 2020 and could push several economies into recession, including Japan and the euro area,’ the OECD said.
‘The overall impact on China would also intensify, reflecting the decline in key export markets and supplying economies.’
If the situation does not deteriorate – with the epidemic peaking in China in the first quarter and outbreaks in other countries contained – the OECD expects global growth still to be affected, but to a lesser extent.
In this scenario, it expects the world economy to grow by 2.4 per cent this year, the lowest since the depths of the financial crisis in 2009, and down from a forecast of 2.9 per cent.
The UK’s economic growth expectations were also slashed to 0.8 per cent, from a previous forecast of 1 per cent.
In the eurozone, where the number of cases is rising fast, the economy is also seen growing by 0.8 per cent, instead of 1.1 per cent.
As the first British death was confirmed last week, shares around the world plunged – triggering an alarming fall in the value of savers’ pensions and investments.
The rout knocked £4.6trillion off global shares in just one week, as markets across Europe, Asia and the US were hammered.
The FTSE 100 fell another 3.2 per cent – or £54.2billion – on Friday to hit the lowest level since July 2016, shortly after the Brexit referendum.
It had shed 11.1 per cent, or £206.6billion of its value, since markets opened last Monday morning.
The biggest casualty on Friday was travel giant TUI, which saw shares plunge 9.5 per cent.
The weekly rout on the FTSE 100 is the third biggest on record, after the credit crunch in 2008 and the Black Wednesday crash in 1987.
The wider FTSE 250 index dropped another 2.29 per cent, or £8.2billion. It shed £44.4 billion – or 11.3 per cent of its value – last week.
The vast majority of savers will have money tied up in FTSE 100 firms, either in pensions, investment funds or stock market ISAs.
