Governor Mark Carney called the Bank of England’s (BOE) actions “a big deal” this morning, and it seems that the Chancellor is taking a similar approach given the scale of the fiscal intervention. This marks the end of austerity for sure. A £30bn Coronavirus stimulus package compares to previous stimulus packages following the global financial crisis which totalled c.£42bn across 07/08 and 09/10. The move by the UK government is a major one, and it aims to be practical with immediate effect. While the Chancellor talked about long-term spending on infrastructure, the Governor was also talking about building a “bridge” over this difficult period. It seems clear from the combined actions of the government and the BOE that the real fear is that small and medium businesses struggle to access finance, which could lead to permanent economic damage if allowed to happen. Therefore, this bridge will be built on easy to access funding and low interest rates. As central bankers and governments around the world have seen many times before, what gets given easily is often difficult to take away. With high uncertainty surrounding the effects of the Coronavirus, one cannot blame policymakers for throwing everything at it.
Key measures to address the Coronavirus include:
Other measures worth noting:
Last but by no means least, a potentially large infrastructure package although we clearly lack details here. Around £600bn is said to be spent on a national infrastructure strategy (connectivity, broadband, housing etc) by 2025. There was not much detail on the environment side however.
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