Mark Carney warns Coronavirus is poised to slow UK economy as stock markets plummet

Coronavirus is poised to slow down the UK’s economy, the governor of the Bank of England warned today.

Mark Carney said the COVID-19 virus outbreak could trigger a downgrade in the nation’s economic growth forecasts.

He told Sky News: “The direction is slower – the direction is down.

“It’s hard to be precise at this moment about the magnitude and very important the duration. How long this will last we just don’t know.”

The interview with Mr Carney – who steps down next month – was broadcast as the FTSE 100 share index fell 3.2% this morning in early trading and was on track for its worst week since the 2008 financial crisis.

The index has now lost about 13% since a recent peak on February 12. On Wall Street the Dow Jones share index plummeted yesterday by more than 1,000 points, the worst one-day drop in history.

Tokyo’s benchmark plummeted by an unusually wide margin of 3.7%, and Seoul and Sydney dropped by more than 3%. Hong Kong and Shanghai fell over 2.5%.

A growing list of major companies are issuing profit warnings and say factory shutdowns in China are disrupting supply chains.

They say travel bans and other anti-disease measures also are hurting sales in China. Virus fears “have become full-blown across the globe as cases outside China climb,” Chang Wei Liang and Eugene Leow, of Singapore bank DBS, said.

In his final interview as bank governor, Mr Carney told Sky News there were “heroic” efforts to fight the virus but “we’re not yet out of the woods”.

He was quoted by Sky as saying: “What we are picking up with some of our bigger companies and companies around the world is that supply chains… are getting a little tight. That’s lower activity.

There’s less tourism – as you can see on our streets here in the UK. That’s lower activity as well.

“We would expect world growth would be lower than it otherwise would be, and that has a knock-on effect on the UK.

“We’re not picking that up yet at all in the European and UK economic indicators, but if the world is slower than the UK, a very open economy, will have an impact.”

England’s chief medical officer has warned it is “just a matter of time” until coronavirus spreads in the UK, as the number of confirmed cases in the country jumped to 16.

Three people tested positive for Covid-19 in the UK on Thursday, including the first confirmed case in Northern Ireland.

Experts have warned of school closures and cancelled sporting events as the disease spreads across the globe.

Professor Chris Whitty, chief medical officer, said on Thursday that there could be a “social cost” if the virus intensifies, including school closures for more than two months.

He told the Nuffield Trust summit: “One of the things that’s really clear with this virus, much more so than flu, is that anything we do we’re going to have to do for quite a long period of time, probably more than two months.”

In China, where the virus originated, 78,497 cases have been reported, including 2,744 deaths.

Chairman of the Commons Health Committee, and Tory former health secretary, Jeremy Hunt said people need to consider the social and economic trade offs they are prepared to make to try and contain the speared of the coronavirus.

Referring to the situation in China, Mr Hunt told BBC Radio 4’s Today programme: “In Wuhan, it appears that it has peaked at less than 5% of the population getting it.

“And we are having to make contingency plans for 70% of the population getting it, and in terms of the number of lives lost, there is a massive difference, hundreds of thousands of lives difference, if you can contain it to less than 5%.

“And, so, the question we have to ask ourselves, and I think the Government is right to start to spell this out – but I think they need to go further – is what are the social and economic trade-offs that we are prepared to make to keep the spread of the virus at that low level.

“We are starting to hear some of the things that the Government is considering.

“We are a mature democracy and I think it is perfectly possible to count on the co-operation of the public to comply with guidelines and recommendations made by the Government without the kind of authoritarian measures that we have seen on our TV screens.”