Boris Johnson on Thursday planned Britain’s initial economic response to the coronavirus outbreak, as the prime minister attempted to prepare for a likely epidemic without sparking widespread public panic.
Mr Johnson held private talks with Mark Carney, outgoing Bank of England governor, and Rishi Sunak, chancellor, in Downing Street to discuss measures which could include monetary policy easing and a range of business support measures in next week’s Budget.
Downing Street declined to comment on the meeting, part of a wider strategy to discreetly make preparations for the possibility that the spread of the virus will spark major economic and social disruption.
The sight of supermarket shelves stripped of dried pasta and other foodstuffs is an indication of the febrile public mood. Behavioural scientists — so-called “nudge” experts — have been brought in to advise ministers on the dynamics of panic.
© Joe Giddens/PA
The imminent prospect of coronavirus breaking out into wider British society now dominates government thinking, from the economy to whether parliament will have to be shut down or the prospect that the virus disrupts Mr Johnson’s Brexit timetable.
Mr Johnson told ITV’s This Morning that the country was “still at the stage where the single best thing we can do . . . is just wash our hands”. But measures are now on the table that go well beyond providing advice on personal hygiene.
Mr Carney said this week he wanted action to be taken to help households and companies “manage through an economic shock that could prove large but will ultimately be temporary”.
The BoE was pleased on Thursday to see UK Finance, which represents the financial services sector, announce that its members would offer support to customers losing money as a result of coronavirus, including increasing overdrafts or offering repayment relief on loans.
Internally, the BoE is working on a plan to provide banks with incentives to offer small companies help in dealing with supply chain disruptions; it hopes to roll this out quickly.
Mr Carney and his successor, Andrew Bailey, have stressed that, if needed, the BoE’s monetary policy committee could cut interest rates from their current level of 0.75 per cent ahead of its scheduled March 26 meeting.
Meanwhile, Mr Sunak’s Budget next week is being written with “security” as its theme and will include measures to help companies facing cash flow problems because of the virus, including giving them more time to pay tax bills.
The chancellor may also use the coronavirus outbreak as a reason to suspend the fiscal rules set out in the 2019 Conservative manifesto, something that Mr Johnson wanted to do in any case.
The rules require a balanced current budget — day-to-day spending — by 2023, but any extra spending or fall in tax receipts linked to the virus would have endangered that target.
Mr Sunak has vowed to do whatever is necessary to protect the economy, but his allies have so far suggested the Budget will focus on targeted interventions rather than a big fiscal stimulus.
The meeting on Thursday of the government’s Scientific Advisory Group for Emergencies included behavioural experts to advise ministers on the likely effect of policy decisions and whether they could exacerbate the mood of public anxiety.
Downing Street was quick to dispel claims that parliament could be closed down from March 31 until September because of the virus, a move which Mr Johnson’s allies said would send completely the wrong “signal” to the public.
Jacob Rees-Mogg, the House of Commons leader, told MPs “There are no plans to close the House down. The public will expect parliament to sit and get on with its job. Parliament has proven itself to be very resilient over the years.”
Mr Rees-Mogg said there was “no medical reason on current advice” to justify closing parliament, but contingency plans are nevertheless being drawn up given the fact that 650 MPs travel from Westminster to their constituencies most weeks.
One scenario being discussed at Westminster is for elderly members of the House of Lords to stay away if the virus becomes more widespread.
Mr Johnson’s allies said he would face a difficult choice between measures to delay the spread of the virus — so that it peaks in the spring when the NHS is under less pressure — and acting too quickly and causing unnecessary disruption.
Chris Whitty, chief medical officer, said this week that actions such as reducing mass gatherings and closing schools might be good for the NHS but “some of the things we would have to do would come at a social cost”.
Mr Johnson said on Thursday he was being told for now not to overreact: “At the moment what they are telling me is, actually, slightly counter-intuitively, things like closing schools and stopping big gatherings don’t work as well perhaps as people think in stopping the spread.”
A coronavirus epidemic would also put extreme strain on the British government as it struggles to negotiate a post-Brexit trade deal and prepare complex new border and immigration arrangements before Mr Johnson’s December 31 deadline.
But Downing Street insisted Mr Johnson would not seek an extension to the transition period beyond the end of 2020, while EU chief negotiator Michel Barnier said “for the moment circulation between two countries is open . . . meetings are not forbidden”.
Asked whether the spread of the virus could cause the cancellation of meetings of EU and UK trade negotiators in coming weeks, Mr Barnier added: “We are up to 200 people in the same room. We will take precautions, I promise.”
Additional reporting by Jim Brunsden in Brussels
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