LONDON, March 12 (NNN-AGENCIES) — Britain pledged to do whatever it takes to protect the economy from the impact of coronavirus, shortly after the Bank of England slashed interest rates in a double-barrelled stimulus package to tackle the risk of a recession.
New finance minister, Rishi Sunak said the economy faced a “significant impact” from the spread of the virus, even if the hit would be temporary, and unveiled a 30 billion pound fiscal stimulus plan.
“Our economy is robust, our public finances are sound, our public services are well-prepared,” he said as he began an annual budget speech to parliament on Wednesday.
“I will do whatever it takes to support the economy.”
Sunak, who has only been in the job for a month, announced a package of measures to help companies facing a cash-flow crunch, including a year-long suspension of a property tax paid by smaller firms.
He also said companies and self-employed people would be able to defer tax payments and he relaxed sick pay qualification rules for workers.
Britain’s health system and other public services would receive an extra 5 billion pounds to help counter the spread of coronavirus.
Prime Minister Boris Johnson had hoped the first tax-and-spending plan of his new government would showcase his plans to direct investment towards poorer regions, where voters helped him to a big election victory in December.
But with medical officials warning of an expected jump in coronavirus cases in the coming weeks, Sunak has new spending priorities that could force him to relax the government’s self-imposed borrowing rules.
Against a backdrop of plunging stock markets worldwide and signs of a slowdown appearing in Britain’s economy, the Bank of England cut its key rate by half a percentage point to 0.25%, echoing last week’s emergency move by the US Federal Reserve.
The BoE also introduced a new program for cheap credit and reduced a special capital buffer to give banks more room to lend.
“This is a big package. It’s a big package. It is a big deal,” Governor Mark Carney said, adding that the BoE’s measures were equivalent to “north of 1%” of economic output.
He said the Bank was coordinating with the government to have “maximum impact”.
Britain’s economy unexpectedly flat-lined in January even before the impact of the coronavirus kicked in, according to official data published on Wednesday. — NNN-AGENCIES
