Business reaction as Bank of England cuts interest rate due to coronavirus

The bank said "risky asset and commodity prices have fallen sharply and government bond yields reached all-time lows consistent with a marked deterioration in risk appetite and in the outlooks for global and UK growth.

"Indicators of financial market uncertainty have reached extreme levels."

Here's the latest business reaction to the interest rate cut, which comes on the morning of Chancellor Rishi Sunak's first budget.

Dr Adam Marshall, director general of the British Chambers of Commerce, said: "Businesses will welcome the decisive action taken by the Bank of England to support the economy at this delicate moment.

“The Bank and UK financial institutions must now work together to ensure that these policy measures translate into real-world support for firms on the ground.

“We will want to see banks using new flexibilities to do everything they can to help businesses whose cash flow and prospects have been disrupted due to the impacts of coronavirus."

Charles Brook, partner at Poppleton & Appleby Northern, which has offices in Huddersfield and Manchester, said: "The interest rate cut is clearly an indicative adjustment intended to make the financial markets aware that the government is ready to take rapid steps to avoid deflationary effects of the Covid-19 epidemic.

"It may stem further dramatic falls in FTSE and also help to support the falling value of the pound. However, it will certainly be welcome by the faltering housing market and businesses with significant borrowings, but I can’t imagine that it will do much to assist improvements in domestic spending on non-essential goods.

"A positive move but not especially desirable for small investors and pensioners whose portfolios have taken a hammering already."

Rupert Thompson, chief investment officer at wealth management firm Kingswood, said: "The rate cut itself is probably of most importance symbolically as it is unlikely to be particularly effective in mitigating the looming disruption from the coronavirus.

"Importantly, however, it is being accompanied by measures to relax capital rules for the banks so they can provide more support for struggling businesses.

"Moreover, today’s budget will very likely relax controls on day-to-day government spending. This should provide additional support to the economy over coming months. A large increase in investment spending is also planned but inevitable delays in implementing it means this will be much less helpful in boosting the economy short term.

"Despite these various moves by the authorities, the UK economy - like many other economies round the world - will struggle to escape a short-lived recession over coming months.”