Brexit poses global financial risk, Bank of England warns
June 16, 2016, 5:08 pm    

The Bank of England has warned that uncertainty about the EU referendum is the "largest immediate risk" facing global financial markets.

The Bank said there were "risks of adverse spill-overs to the global economy" from the 23 June vote.

It was "increasingly likely" that sterling would fall further - perhaps sharply - in the event of a leave vote, the Bank added.

Vote Leave`s Andrea Leadsom said the comments risked financial stability.

Sterling fell throughout the afternoon, down around 1.3% against the dollar to $1.4016, and slipped 0.18% against the euro following the release of May`s Monetary Policy Committee (MPC) minutes.

Its nine members said that a "vote to leave the EU could materially alter the outlook for [economic] output and inflation".

MPC members said there was growing evidence that UK businesses and consumers were putting off "major economic decisions" ahead of the referendum, with real estate and car purchases delayed, along with business investments.

The Bank said it had contingency measures in place to deal with any fall-out from the referendum result, including the offer of more support to banks and partnerships with other central banks to maintain financial stability.

The warning came as the MPC held interest rates at the historic low of 0.5% for another month.

`Financial stability`

Vicky Redwood, chief UK economist at Capital Economics, said a vote to leave the EU would probably mean rates staying on hold for some time, while a remain vote may put a rate rise "back onto the agenda before too long".

Howard Archer, chief European and UK economist at IHS Global Insight, said: "On the increasingly questionable assumption that the UK votes to stay in the EU next Thursday, we expect the Bank of England`s eventual next move will be to raise interest rates from 0.5% to 0.75% - but not until May 2017."

Vote Leave`s Andrea Leadsom told BBC Radio 4: "[The Bank`s] overriding objective is to ensure financial stability. This intervention is designed to do the exact opposite."

"What the Bank of England is doing is rather than saying we have the tools at our disposal to be able to deal with any eventuality, they are instead going along with those forecasts that say there will be some kind of meltdown and there just is not the evidence for that," she added.

Earlier, Bank of England governor Mark Carney hit back at critics in the Vote Leave campaign who had warned him about commenting on the Referendum.


m1.png m2.png m3.png m4.png m5.png
f1.png f2.png f3.png f4.png f5.png
+ =
Latest Videos
VIDEO: The Biology of Bliss and the Human OS - Jamie Wheal
Terror and Tourism: Changing the Travel Landscape
Earth In 2050 - HD Documentary 2015
The drive for gender equality in corporate Japan
Plane touches down then aborts during storm (VIDEO)
The Fermi Paradox II — Solutions and Ideas – Where Are All The Aliens (VIDEO)
Money Survival Tips for Millennials (VIDEO)
Lightning strike explodes a tree (VIDEO)
Latest Photos
best cities for small businesses
Best Jobs in America (PHOTOS)
Inside the coolest private jets (PHOTOS)
The best hotel club floors in the world
Winning Images from the 2015 National Geographic Traveler Photo Contest
PHOTOS: Raging Wildfires Prompt Major Evacuation
Amazing Geometry Cities from air - Photos
Photos Bangkok Get snow - Opens Snow Village