As the effects of coronavirus change with almost bewildering speed, the new Bank Of England governor Andrew Bailey has asked firms to think twice before firing people because of the coronavirus pandemic.
Instead he is urging them to step back and look at what help is available to them, saying: “Come and talk to us or the government before you take that position.”
Many firms are already cutting staff as they are faced with an uncertain future as the crisis continues to grow.
Mr Bailey said his ‘big message’ is: “we will be there to support your needs.”
He was responding to a series of questions about what might happen to the economy as the virus continues to spread.
He was asked: “What is your message to a boss right now facing plunging customer revenue, massive uncertainty and hovering over a computer mouse deciding whether or not to click and fire people or not pay people? Are you telling them to hold off?”
He said: “I think my message is exactly that. Stop and look at what’s available.
Look at what the government’s doing. Look at what the Bank Of England is doing. We’re working in close co-ordination.”
“Look at what’s available. Come and talk to us before you take that decision because supporting companies and enabling companies to support their workforces is critical here.”
Pushed to the edge
A growing number of firms like airlines, retailers, restaurants, theatres, cinemas and pubs have been warning they are being pushed to the edge as people are limiting themselves to everything but essential personal contact.
Chancellor Rishi Sunak has promised £350 billion of loans and other aid to support struggling firms.
When he was asked if the subsidies would be available to firms which had already fired personnel Mr Bailey said there were ‘important discussions’ going on between those companies and the Treasury.
He added: “Supporting the employment and income of the people in this country is critical.”
Economists are predicting that the help being offered in the form of tax cuts and extra spending is going to have an effect on government borrowing.
They are predicting the Bank Of England will start to buy up tens of billions of pounds more of government debt.
Mr Bailey would not comment on the possibility other than to say: “This is a crisis we’re all in. It’s an emergency situation.”
Acknowledging that the future remains uncertain for the world’s financial markets he said it was his ‘strong preference’ that they remain open though he was keeping ‘a very close eye on their stability’.
He also had a strong warning for City traders not to try to ‘exploit’ the situation by aggressively betting on the value of specific companies continuing to fall in the current situation.
He warned: “Anybody who says, ‘I can make a load of money by shorting’. which might not be frankly in the interest of the economy, the interest of the people, just stop doing what you’re doing.”