The Bank of England has announced an emergency cut in interest rates to shore up the economy amid the coronavirus outbreak.

Policymakers reduced rates from 0.75% to 0.25%, taking borrowing costs back down to the lowest level in history.

The Bank said it would also free up billions of pounds of extra lending power to help banks support firms.

It comes as the chancellor is expected to announce further measures to support growth and jobs in the Budget later.

Mark Carney, the outgoing governor of the Bank of England, said policymakers had seen a "sharp fall in trading conditions", including spending on non-essential goods.

"The Bank of England's role is to help UK businesses and households manage through an economic shock that could prove large and sharp, but should be temporary," he said.

He said the Bank's co-ordinated action on Budget day was designed to have "maximum impact".

Mr Carney stressed that the economic damage caused by the coronavirus remained unclear. However, he suggested that the UK economy could shrink in the coming months.

He said early evidence from China suggested that the world's second largest economy was on course to contract in the first quarter.

Other nations were experiencing a "similar shift", he said. "I would emphasise the direction is clear, though the orders of magnitude are still to be determined."

The emergency rate cut comes as a sixth person died from the virus in the UK, which has a total of 382 cases.

The latest person to die was a man in his early 80s who had underlying health conditions.

Meanwhile, Manchester City's Premier League match against Arsenal on Wednesday has been postponed as "a precautionary measure" because of the outbreak.

A number of Arsenal players are in self-isolation after coming into contact with Olympiakos owner Evangelos Marinakis, who tested positive for the virus..

Chancellor Rishi Sunak has pledged to help the UK battle the impact of the coronavirus, saying the NHS will get "whatever resources it needs" during the crisis, while he is also expected to unveil measures to boost the self-employed and small businesses who are left out of pocket.

Meanwhile, NHS England said it was  for the infection, with the number of cases set to rise.

The sudden cut in the Bank rate will immediately reduce the mortgage bill of a minority of homeowners. Others will have to wait to see how their home loan provider reacts at a time when mortgage rates are already at very low levels.

Little will change for savers, who have had to endure years of low returns anyway. They may take heart from the fact this is a temporary measure from the Bank.

Most people are, of course, savers and borrowers.

As well as concern over their physical health from coronavirus, their financial health will primarily depend on their job.

This emergency action is clearly designed to help protect businesses, particularly small and medium-sized ones, and in turn the employment of millions of people.

The interest rate cut was part of a package of measures introduced by the Bank to support the economy.

It also announced a new £100bn scheme to help ensure households and businesses - particularly small and medium-sized firms - benefit from the reduction in interest rates.

The Bank of England said other changes would free up an additional £190bn for banks to lend.

It said the package of measures would "help UK businesses and households bridge across the economic disruption that is likely to be associated with Covid-19".

The Bank said it expected UK economic activity to "weaken materially" over the coming months, but it was ready to take "all further necessary steps to support the UK economy".

"These measures will help to keep firms in business and people in jobs and help prevent a temporary disruption from causing longer-lasting economic harm."

Initially, the pound fell against both the euro and the dollar in reaction to the rate cut, but then rebounded.

Share markets reacted positively, with the FTSE 100 rising more than 2% in early trading.