- Bank of England slashes interest rates in the UK to shore up the economy.
- Interest rates cut from 0.75% to 0.25%.
- The move comes ahead of a series of other emergency measures to be announced by UK Chancellor Rishi Sunak in his annual budget on Wednesday lunchtime.
- The UK government is under pressure to take further measures to tackle the crisis after UK Health Minister Nadine Dorries announced on Tuesday that she had been diagnosed with COVID-19.
- Read the latest on how the coronavirus is spreading across Britain.
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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.