“The Bank will take all necessary steps to support the UK economy and financial system, consistent with its
statutory responsibilities.”
He added that he has been holding a series of discussions with the chancellor and said the Bank is ensuring
“all necessary contingency plans are in place”.
Mr Carney said the financial system was prepared for an economic shock thanks to stress tests regularly
carried out on banks’ balance sheets. The tests simulate a range of potential shocks, including a dramatic
economic slowdown in China and Hong Kong. The Chinese economy has been impacted significantly by
the virus with factories shut down and planes grounded, delivering a knock-on effect for companies that
source goods and materials from China.
“We don’t know what’s going to happen,” Mr Carney said. “Certainly the situation we are entering, the
economic situation we are entering because of the virus – we didn’t run a stress test against that specific
situation but we can learn from the stress tests we’ve been carrying out since 2014 about the resilience of
the institutions against that type of risk.”
Banks have “considerable capital and strength” with which to support businesses through the shock
resulting from coronavirus, the governor said.
“It’s not just lending to businesses ... for new investment or expansion, it can be working capital and other
very essential aspects for businesses who know that this is a difficult but ultimately temporary situation.”
He added: “We would want the banks to be able to use their balance sheets in order to support their
customers and, by extension, support the economy.”
The Bank of England will also look at facilities it can provide to help support lending to small and medium-
sized businesses, Mr Carney said.
Asked by Labour MP Angela Eagle about the impact of coronavirus on UK workers, including those on
zero-hours contracts or working in the gig economy, Mr Carney refused to be drawn. “I don’t want to lead
the government, but these are considerations we all need to take into account,” he said.
Greggs chief executive Roger Whiteside said yesterday that its staff would be paid for their contracted
hours if they had to self-isolate because of the virus. “Our default position is that we pay contract hours. We
don’t have any zero contract hours,” he told the BBC.
Wetherspoons said last week that its 45,000 employees would be paid statutory sick pay if they isolate
themselves. Statutory sick pay is £94.25 per week for workers who have been off for more than four days.