Image source, Getty Images

The UK economy did not grow at all in January, according to the latest gross domestic product figures from the Office for National Statistics.

In the three months to January, the economy also remained flat.

It was the third consecutive month that the three-month measure of GDP had reported no growth at all.

Image source, Getty Images

European Central Bank chief Christine Lagarde said yesterday that Europe could risk a major economic shock similar to the financial crisis. Does Mr Carney agree?

"It is a different form of shock to 2008," he says. "The financial system was the core of the problem in 2008 and it is in a very much different place... there is no reason for this shock to turn into 2008 if we handle it well."

After a fall following the announcement of the emergency rates cut, the pound is back up into positive territory, trading up 0.37% against the dollar.

Meanwhile, the FTSE 100 is up about 1.35% after the Bank of England unexpectedly cut interest rates to shield the economy from the impact of the coronavirus outbreak.

Shares in major UK banks, including Lloyds, RBS and Barclays, rose between 1% and 2% after the central bank said lenders could use one of their capital buffers to maintain lending during the outbreak.

The Bank didn't elect to buy any more bonds through the stimulus measure known as Quantitative Easing (QE). How come? Mark Carney is still a fan of the move, he says.

"Asset purchases can be one component of additional firepower," he says. If needed, they still could be.

Why not now? "This is a big package," he says.

The extra capacity the banks have been given to lend - up to £190bn - should be enough, he adds.

Image source, Getty Images

From the Bank of England's press conference, the following:

"Activity is likely to weaken materially in the coming months" in the wake of coronavirus, says Governor Mark Carney. Smaller companies will be worst hit.

"The reduction in bank rate will help bolster confidence at this difficult time," he adds.

Andrew Bailey, who will soon replace Mark Carney as governor, says the Financial Policy Committee's decision to ease capital requirements will be followed by "monitoring" to make sure banks lend.

Image source, Getty Images

While the Bank's package of measures might help business, Laura Suter at AJ Bell doesn't reckon they will do much for individuals.

"Mortgage rates are already near record lows and it’s unlikely providers will be able to cut them much more – let alone pass on the entire rate cut. The exception is those on tracker rates, who will see a near-immediate effect on their monthly repayments.

“What’s more, savers who have already seen a swathe of cuts to the interest they get on their cash are likely to be hit further.

“However, the potential cut to interest on debt could come at a crucial time for some. One in 8 adults have no savings at all and 45% of the population have less than £2,000 in cash - so if Coronavirus starts to hit people’s earnings we could see a big rise in the level of debt people have to take on just to pay the bills.

"If the rate people are paying on this debt falls it could provide some support at the edges.”

Image source, Getty Images

Uber will tell riders and drivers that it may temporarily suspend the accounts of anyone who has tested positive for the coronavirus or has been exposed to it, the company said.

"We have a dedicated global team, guided by the advice of a consulting public health expert, working to respond in every market where we operate around the world," Uber said. "We've already helped drivers in some affected areas, and we're working to quickly implement this worldwide."

It said compensation would be available to drivers.

Image source, HM Treasury

The Bank's cut in interest rates is the first unscheduled rate change since the financial crisis, says Laura Suter, personal finance analyst at investment platform AJ Bell.

However, "the cut to 0.25% also leaves minimal ability to slash rates further in the future", she says.

The "swift" move from the Bank of England "will shock some at how quickly it happened", she adds.

“The move is coupled with support for businesses, with a new term funding scheme and relaxing bank credit rules to get more help to businesses, in an attempt to help small companies through the disruption, slower sales and potential shutdowns that may be caused by coronavirus.

"This gives an indication of what is to come in Rishi Sunak’s first Budget later today, with further help for businesses and even a business rate holiday suggested as a helping hand for companies."

Image source, AFP/Getty Images

The Bank of England fired its "big bazooka" with its cut in interest rates, "but it’s really an appetiser for the main course later". said Neil Wilson, chief market analyst at Markets.com.

"Unlike the Fed, which shot its bolt early, this is clearly part of a major coordinated response to the coronavirus pandemic with a twin pronged monetary and fiscal package.

"It’s a smart decision to move ahead of the scheduled meeting and do this on Budget day as it maximises the impact of the cut by tying it to the fiscal package."

Today Programme
BBC Radio 4

Image source, AJ Levy

Sir John Timpson was asked on Today whether he had seen a drop in footfall as a result of the coronavirus outbreak.

"I've detected it a bit," he said.

"The last two weeks have been pretty odd.

"We've got some of the supermarkets reporting that they've had the best day ever, this is the panic-buying bit.

"No-one as far as I know is panic buying shoes repairs or key cutting or anything like that, and we just reflect the footfall on the High Street and... yeah, there's a little bit, it's about 3-4% in my view... that our sales are below normal, and that's just now."

The pound slumped 0.5% against the euro to €1.136 and was little changed against the dollar at $1.289. The cut in rates makes the UK less attractive as a place to deposit money by foreign investors seeking cash deposits or bonds.

Share markets reacted positively, albeit after a choppy week. The FTSE 100 rose 1.4% in early trading.

Faisal Islam
BBC Economics Editor

Image source, Getty Images

The dramatic emergency rate cut will dominate the headlines, but it is the overall package of measures which the departing Bank of England governor Mark Carney will stress as a support for the economy in this extraordinary coronavirus crisis.

The key target of this move is the cashflow of small and medium-sized businesses, which could be hit by a combination of slumping demand, trade difficulties and staff absence.

The Bank and Treasury agree that this will be a temporary shock. The aim, therefore, is to prevent unnecessary permanent economic scars. Alongside Budget measures, it is designed as a bridge beyond the virus.

So the Bank's base rate is slashed to its record low, first reached in the aftermath of the EU referendum. But as important is the new TFSME - the "Term Funding scheme with additional incentives for Small and Medium-sized Enterprises".

This proved rather successful after the EU referendum, and the aim is to get the banks to pass on the rate cut in full to businesses, particularly small and medium-sized firms, which face the greatest pressure to cut staff or hours in a crisis.

The deployment of the counter-cyclical buffer, lowering capital requirements for banks by 2%, was designed for exactly this sort of rainy day. It should provide the firepower for banks to boost lending well above current lending levels.

To be clear, coronavirus is unique and highly unpredictable. There is a fundamental problem of people and businesses not being able to function because of the measures to contain the virus. The message from the Bank is that the banking system is fully padded up to help businesses get through this.

Today Programme
BBC Radio 4

Image source, bb

More reaction to that emergency rate cut from the Bank of England now.

The rate cut is about trying to help businesses cope with the effects of the coronavirus - and there is expected to be quite a lot in the Budget in that vein as well.

One group of businesses that could do with some help is High Street retailers - already struggling and now fearing a big drop in footfall because of the virus

Sir John Timpson, owner of Timpsons - which does key cutting and shoe repairs - was on the Today Programme.

"I think it's an indication that the chancellor is going to take all this very seriously.

"I don't think in itself it's going to make the right sort of difference immediately to retailers. Not just retailers or restaurateurs or all these people who are about to or are already suffering in terms of lack of customers."

Richard Lim of Retail Economics also has views on what the Chancellor Rishi Sunak needs to do when he delivers his first Budget later today.

"The chancellor’s priority in the budget today is to protect jobs and businesses. We have two million low paid workers in the economy, almost five million.

"Changing the rules on sick pay, the initial burden of which falls on companies is essential amongst other measures to support business and access to credit."

Image source, Getty Images

Reaction is starting to come in the Bank of England's emergency cut in interest rates, this one from the retail sector.

Image source, Getty Images

Another thing the Bank did was to cut a special capital buffer banks had to hold. Essentially, banks must set aside provisions for a rainy day. That's their capital. It's what insulates them from oblivion if borrowers don't repay and protects your deposits. Banks have been holding a special pot, worth about 1% of assets, just in case times turn bad.

The Bank has now released them from holding that, so they can lend more or absorb more losses.

"The release of the countercyclical capital buffer will support up to £190bn of bank lending to businesses. That is equivalent to 13 times banks’ net lending to businesses in 2019," it said.

This big fat package of measures means no excuses from the high street banks, says the BoE:

"This means that banks should not face obstacles to supplying credit to the UK economy and to meeting the needs of businesses and households through temporary disruption."