The Bank of England has slashed interest rates to 0.25% in an emergency move to protect the UK economy from the coronavirus outbreak

As the Coronovirus pandemic takes hold across the UK, with health authorities reporting cases rising from 25 to 87 in a single day, and resulting in the UK’s chief medical officer Prof Chris Whitty announcing that an epidemic in the UK was ‘highly likely’, Londoners pass-by Evening Standard headlines at Charing Cross in central London, on 4th March 2020, in London, England. Getty

The Bank of England has slashed UK interest rates from 0.75% to 0.25% in an emergency move to shore up the UK economy in the face of the coronavirus outbreak.

A spokesperson said that the decision had been taken due to the fact that “Indicators of financial market uncertainty have reached extreme levels.”

“Although the magnitude of the economic shock from Covid-19 is highly uncertain, activity is likely to weaken materially in the United Kingdom over the coming months.

“Temporary, but significant, disruptions to supply chains and weaker activity could challenge cash flows and increase demand for short-term credit from households and for working capital from companies.

“Such issues are likely to be most acute for smaller businesses. This economic shock will affect both demand and supply in the economy.”

The move comes ahead of the announcement of UK Chancellor Rishi Sunak’s annual budget on Wednesday lunchtime.

Sunak is expected to announce a series of measures to protect businesses which are already struggling due to the hit on economic confidence in the UK.

Measures likely to be revealed by Sunak include a temporary cut to business rates and an emergency fund for small businesses.

The Chancellor is also expected to announce an emergency boost to the National Health Service in anticipation of a likely coronavirus epidemic in the country.

The Bank of England’s decision was met with surprise by market analysts.

“The timing and size of the move from the Bank of England come as a surprise to markets, and seem calculated to send a clear message of policy synchronisation,” Ranko Berich, Head of Market Analysis at Monex Europe said.

The developments come as coronavirus hits the UK government itself, with the Health Minister Nadine Dorries announcing on Tuesday that she had been struck by COVID-19.

Dorries met with Prime Minister Boris Johnson and hundreds of others in Westminster shortly before being diagnosed with the virus.