New Bank of England boss Andrew Bailey has not ruled out handing money directly to households and businesses to cope with the coronavirus crisis, and he urged firms to seek support before laying off staff.
In an interview with Sky News, Mr Bailey, who took over from Mark Carney on Monday, said the “Bank of England’s not done”, and signalled it would consider radical moves to keep people financially afloat if necessary.
It comes amid speculation over whether the Bank would consider a new form of so-called quantitative easing – effectively printing money – to boost the economy.
I don't rule anything out, franklyAndrew Bailey, Bank of England governor
He said: “Everything is on the table that is reasonable, within the policy tool set.
“We will do what it takes to meet the needs of the economy and the needs of the people of this country.
“I don’t rule anything out, frankly, but please don’t therefore interpret it that we’re about to do it either.”
His comments come after Chancellor Rishi Sunak and the Bank unleashed a £350 billion package of support for the economy on Tuesday.
The Bank has already slashed rates to 0.25% in an emergency move last week, and its policymakers are due to meet again on March 26.
But markets resumed their nosedive on Wednesday, with the FTSE 100 Index in London dropping more than 3% as Wall Street opened sharply lower in America despite the measures announced in London, with similar moves worldwide.
We warmly welcome Andrew Bailey as our new Governor. pic.twitter.com/ttDTKC82RS— Bank of England (@bankofengland) March 16, 2020
In a separate interview with the BBC, Mr Bailey also made a plea to struggling firms not to fire employees as a knee-jerk reaction, as there may be financial support available.
He said: “Stop, look at what’s available, come and talk to us [or] the Government before you take that position.”
However, firms have already begun to shut sites and warn over redundancies, with retailer Laura Ashley filing for administration on Tuesday after rescue talks were halted by the coronavirus outbreak.
Fran Boait, executive director of Positive Money, a pressure group seeking reform in finance, said the Bank’s action is welcome but she warned it may not help those most in need.
She said: “Any economic response to Covid-19 must prioritise protecting the most vulnerable and reducing the spread of the virus, and the measures announced so far do not do this.
“Simply pumping new money to businesses won’t stop people who are sick or at risk needing to go to work, and there is no guarantee that these businesses won’t lay workers off.”
The Bank also fleshed out details of its new business lending scheme, unveiled by the Chancellor on Tuesday, which will offer short-term bridging finance for large firms affected by coronavirus.
It said it will be available to companies with significant employment in the UK or with UK headquarters – including firms with foreign owners that have a genuine business in Britain – though they must prove they were in sound financial health prior to the shock.
“We will also consider whether the company generates significant revenues in the UK, serves a large number of customers in the UK or has a number of operating sites in the UK,” said the Bank.