The Bank of England has warned over a “very sharp” hit to the economy from coronavirus and the potential for long-term damage, but said it stands ready to take further action to combat the fallout.

Members of the Bank’s nine-strong Monetary Policy Committee (MPC) voted unanimously at their scheduled meeting to keep rates at 0.1% after recent emergency action took borrowing costs down to the new all-time record low.

They also voted to keep the quantitative easing (QE) at £645 billion after last week unleashing another £200 billion.

In minutes of the MPC meeting, the Bank said the economic impact of the Covid-19 pandemic was “becoming more apparent” and that the risks of businesses going bust and laying off staff could leave the UK nursing long-lasting scars.

New Bank of England Governor
Andrew Bailey took over as governor of the Bank of England on March 16 (Tolga Akmen/PA)

But it said it had further firepower available to it to help limit the impact and could expand its mammoth QE programme further if needed.

The Bank said: “The economic consequences of these developments are becoming more apparent and a very sharp reduction in activity is likely.

“Given the severity of that disruption, there is a risk of longer-term damage to the economy, especially if there are business failures on a large scale or significant increases in unemployment.”

It added: “The MPC… stands ready to respond further as necessary to guard against an unwarranted tightening in financial conditions, and support the economy.”