Today the Bank of England has announced an emergency cut in interest rates in a hope to stabilise the economy amid the Coronavirus outbreak after businesses have been affected by a combination of slumping demand, trade difficulties and staff absence.
Rates have been reduced from 0.75% to 0.25%, which is the lowest level in history. The bank has said that it would also be providing extra measures to help banks support firms after indicators of financial market uncertainty have reached extreme levels.
A new £100bn scheme has been announced to help ensure households and businesses benefit from the reduction in interest rates. The scheme will focus on small and medium-sized businesses.
The Bank of England has said that: “The measures put in place will help UK businesses and households bridge across the economic disruption that is likely to be associated with Covid-19.”
Commenting on the Bank of England’s announcement, BCC Director General, Dr Adam Marshall, said: “Businesses will welcome the decisive action taken by the Bank of England to support the economy at this delicate moment.”
“The Bank and UK financial institutions must now work together to ensure that these policy measures translate into real-world support for firms on the ground.”
“We will want to see banks using new flexibilities to do everything they can to help businesses whose cash flow and prospects have been disrupted due to the impacts of Coronavirus.”
Markets have reacted positively to this news with the FTSE 100 rising more than 2% this morning.