Coronavirus could spark UK economic growth downgrade, Bank of England warns

Mark Carney said the Bank had already seen a fall in activity across the country but admitted it was too early to tell how badly Britain will be impacted by the spread of the virus.

In an interview with Sky News, Carney said: “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, it will have an impact.”

Carney said the Bank was monitoring UK banks to make sure there was no risk of coronavirus triggering a financial crisis but it was “too early to tell” what the spread of the virus meant for the UK.

“The most important thing is to make sure the system is functioning,” he said. “We’re very confident about that and we’re on top of it.”

A number of retailers are already feeling the pinch from the coronavirus outbreak.

Earlier this week, Primark warned that the virus could spark product shortages later in the year.

The value fashion operator said it did not expect any short-term impact, given the increased supply ahead of Chinese New Year, but cautioned that if delays to factory production continued “the risk of supply shortages on some lines later this financial year increases”.

Primark is increasing production from existing suppliers in other regions in a bid to mitigate the potential impact.

Luxury fashion brand Burberry was forced to scrap its full-year profit guidance at the start of February after closing 24 of its 64 stores in mainland China.

Shopper numbers plunged 80% and boss Marco Gobbetti said coronavirus was “having a material negative effect on luxury demand”.

Next month is expected to be a make-or-break period for many retailers desperate to avoid empty shelves as the coronavirus crisis and its impact on supply chains intensifies.