Bank of England releases £150bn
For those who thought we were probably over the “blip” of the decision a fortnight ago…
As it published its twice-yearly assessment of financial stability on Tuesday, the Bank said the risks it had feared ahead of the EU referendum had started to crystallise.
The shares of banks have fallen by 20% since the poll while sterling was plunging to fresh 31-year lows and on the brink of falling though $1.30 as London markets were closing on Tuesday. The pound had spiked to $1.50 as voting closed on 23 June in expectation of a remain victory.
In its financial stability report, the Bank said: “The current outlook for UK financial stability is challenging.”
As a result, the Bank is monitoring a number of sectors closely, including growth in buy-to-let mortgage lending and a potential downturn in the commercial property sector, where a number of major funds have barred investors from withdrawing their investments. The current account deficit – which measures the shortfall between money paid out by the UK and money coming in – and household debt burdens are also on its watchlist.
“The number of vulnerable households could increase due to a tougher economic outlook and a potential tightening of credit conditions. In particular there is growing evidence that uncertainty about the referendum has delayed major economic decisions, such as business investment, construction and housing market activity,” said Mark Carney, governor of the Bank of England, in his third public intervention since the referendum result.