The Bank of England has cut interest rates in an emergency move to shore up the U.K. economy amid growing alarm over the coronavirus crisis.
The Bank announced Wednesday morning it had reduced rates from 0.75% to 0.25%, marking the lowest level in history.
“The reduction in Bank Rate will help to support business and consumer confidence at a difficult time, to bolster the cash flows of businesses and households, and to reduce the cost, and to improve the availability, of finance,” the Bank said in a statement.
The Bank is also launching a new scheme to provide funding for businesses struggling with the virus’s economic impact, noting that while the “magnitude of the economic shock” is still uncertain, disruptions are “likely to be most acute for smaller businesses.”
The Bank’s decision came in the midst of a jittery week for global markets. The Dow Jones Industrial average tumbled 2013 points on Monday, a 7.8% decline that marked the index’s worst-ever showing on a total points basis. The S&P fell more than 200 points in the opening minutes of trading, which prompted the New York Stock Exchange to implement a “circuit breaker” in an effort to slow the sell-off process. The S&P closed the day down 226 points, or 7.6%. The NASDAQ plunged 625 points, or 7.3%.
Wall Street bounced back on Tuesday, as the Dow’s 1,167-point gain marked its third best single-day performance, while the S&P and Nasdaq both recorded their best days since December 2018. Stock markets across Europe opened higher Wednesday morning in the wake of the Bank of England’s rate cut, with London’s FTSE 100 up 1.7% at the start of trading, and the Stoxx 600 index, which tracks the continent’s largest companies, rising 1.3%.
But Asian markets slumped on Wednesday, while Dow futures plunged, signaling that markets may continue to whiplash as governments across the world struggle to cope with the global health emergency.
The Bank of England’s decisive measures offered hopes for a determined response to the crisis from U.K. policymakers. Chancellor Rishi Sunak is scheduled to deliver a budget later today that is expected to include further measures to combat the coronavirus’ economic impact.
Six people have so far died from coronavirus in the U.K., which is currently battling 382 positive cases. On Tuesday, a U.K. health minister, Nadine Dorries, confirmed reports that she had become the first British member of Parliament to test positive for the virus, just two days after attending a reception at Prime Minister Boris Johnson’s official residence.
England’s deputy chief medical officer has pushed back against criticism from a jittery British public, defending the government’s decision to delay closing schools and introduce other strict measures to prevent the virus’ continued spread. Dr. Jenny Harries told the BBC that health experts are assessing new cases regularly to achieve a “balanced response.”
Elsewhere in Europe, confirmed cases and total deaths continue to rise steeply, with Italy recording its highest single-day death toll on Tuesday, even as the government introduced sweeping measures that effectively put the entire country of 60 million under quarantine. Coronavirus killed 168 more people through Tuesday evening, bringing that country’s total to 631 — the largest outside of China, where the virus originated.
Italy has more than 10,000 confirmed cases of coronavirus. France, Spain, and Germany have also been hard hit, with each country confirming more than 1,500 people have tested positive for the virus.
French President Emmanuel Macron addressed the nation on Tuesday after a conference call with other European leaders about the outbreak, asserting that the E.U. will take “all measures necessary” to combat the virus.
He also criticized Austria and Slovenia for closing their borders with Italy, arguing that “we mustn’t give in to panic.”