The economic fallout from coronavirus is unlikely to be as bad as the 2008 global financial crisis, Bank of England governor Mark Carney said on Wednesday.
“It’s different form of shock than 2008,” Carney told journalists. “There is no reason for this shock to turn into the experience of 2008 — a virtual lost decade in a number of economies — if we handle this well.”
The comments came during a hastily convened press conference on Wednesday morning, after the Bank of England announced a surprise package of measures aimed at combating the economic fallout from coronavirus.
Threadneedle Street slashed interest rates at the steepest rate in 11-years and unlocked billions of pounds for banks to keep lending to businesses. Carney said the stimulus package amounted to “north of 1% of GDP” and would allow banks to theoretically lend thirteen times the total lent to businesses in the UK in 2019.
“This is a big package,” Carney said, adding that UK chancellor Rishi Sunak would announce additional government spending measures to combat coronavirus later today.
The emergency action comes as the world grapples with the spread of novel coronavirus, which causes the disease COVID-19. Efforts to contain the outbreak have led to factory shutdowns across China and the total lockdown of Italy, both of which have hit economic activity and had a chilling effect on tourism.
Carney said the Bank of England was anecdotally seeing early signs of economic stress in the UK but said Wednesday’s measures were largely pre-emptive.
“It’s very early days,” he said. “The direction is clear, the order of magnitude is still to be determined.”
Carney said the bank still had room to cut interest rates further to “close to but slightly above 0%” if problems persist.
Read more: Markets climb after emergency rate cut
The OECD recently said coronavirus was the biggest threat to global growth since the 2008 crisis and European Central Bank Governor Christine Lagarde on Wednesday drew parallels to the financial crisis.
Asked about Lagarde’s comments, Carney said: “Some of you watching will recall the financial crisis. Then the financial sector was the core of the problem. Now it is part of the solution.
“We have the resilience in the system that has been built up over the last decade.”
Incoming Bank of England governor Andrew Bailey, who takes over from Carney on Monday, said: “Although the disruption from COVID-19 could be sharp and large, it should be temporary.”
Carney said: “What’s important is a viable business today has the bridge to ensure it’s viable going forward.”
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