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Economic impact of coronavirus bigger than SARS, says Bank of England governor Mark Carney

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The economic impact of China’s coronavirus outbreak is already bigger than that caused by the spread of SARS in 2003, the Bank of England governor Mark Carney has said.

In evidence to the House of Lords economic affairs committee, Mr Carney that while new infections appeared to be slowing, it was still “very, very early days”.

The outbreak in China, the world’s second biggest economy, has prompted large parts of the country to be shut down – with many factories and shops closing their doors.

Mr Carney said: “We should all acknowledge the pain and the suffering that is real and spreading and including in this country.

Governor Mark Carney during the Bank of England's Monetary Policy Report news conference in the City of London

Carney: ‘Too early to say the overall macroeconomic impact’

“While there are some signs of slowing in the pace of infections in China itself, it’s still very, very early days.

“This is, from an economic perspective, already bigger than SARS and it is just too early to say the overall macroeconomic impact.”

Assessments carried out by independent economists suggest the latest outbreak could cause a sharp fall in the pace of growth in China.

Mr Carney said stress tests carried out on UK banks showed they were ready to cope with the shock caused by a much bigger hit to the country’s growth.

He added: “In general, the experience has been with pandemics that they can have quite significant impacts but much of it is recovered in subsequent quarters.”

More than 1,000 people have died, almost all in China, from coronavirus and the death toll has already surpassed the 774 killed by Severe Acute Respiratory Syndrome epidemic in 2002/3.

Today, the Chinese economy is several times bigger than it was 17 years ago, and much more closely intertwined with those of other countries.

Factories that have shut down include those assembling Apple iPhones while western retail chains from Starbucks to Burberry have had to close many stores in the county.

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The outbreak has also strained global supply chains, with Nissan announcing this week it was to halt production temporarily at a factory in Japan due to supply shortages of parts from China.

Global stock markets fell sharply as news of the virus first emerged but have since bounced back, with investors apparently assuming disruption to the economy will be temporary.

Neil Shearing, group chief economist at Capital Economics, said it was “virtually impossible” to quantify the impact of the virus on the world economy, though China’s role at the centre of global supply chains “increases the likelihood that the disruption spreads to other countries”.

Mr Carney’s assessment of the impact of the virus outbreak comes after his US counterpart Jerome Powell said the Federal Reserve was “closely monitoring” it

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