Commenting on the BoE’s emergency rate cut and today’s budget announcement, Rupert Thompson, Chief Investment Officer at Kingswood, said: “The Bank of England’s emergency 0.5% cut in bank rate to the all-time low of 0.25% follows hard on the heels of a similar move by the US Federal Reserve last week.
“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 mean 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.”