Pound falls to new 31-year low against dollar/Bank of England warns: “The current outlook for UK financial stability is challenging.”

Published: July 5, 2016 at 11:13pm

The Bank of England, Britain’s central bank, has warned that the risks posed by the vote for the UK to leave the European Union are “starting to crystallise”.

Its financial stability report, released today, warns that: “There is evidence that some risks have begun to crystallise. The current outlook for UK financial stability is challenging.”

“There will be a period of uncertainty and adjustment following the result of the referendum. It will take time for the United Kingdom to establish new relationships with the European Union and the rest of the world. Some market and economic volatility is to be expected as this process unfolds.”

Acting to fight the looming threat of recession, the Bank of England has reduced the threshold on the amount of capital the banks are required to hold, leaving them with more money to lend – £150 billion – in an attempt at checking the slowdown in business growth.

The bank’s governor, Mark Carney, said today that interest rates would have to be cut to cushion the shock of what follows the Leave vote. The Bank of England cannot fully offset the shock, he said.

Before the referendum, Carney had warned that Britain risked slipping into recession following a Leave vote. But Leave campaigner and current Tory leadership hopeful Michael Gove responded, speaking generally: “This country is tired of (the views of) experts.”

The view of the governor of the Bank of England, on whether Britain should leave the EU or stay in, counted for nothing in the post-factual world down the rabbit hole. Michael Gove, Nigel Farage and Boris Johnson knew more and better than Mark Carney.

In response to the Bank of England’s financial stability report, and other gloomy predictions, the pound fell to a new 31-year low against the dollar today.

The BBC has reported, meanwhile, that business pessimism has doubled in the week since the referendum vote.

Mark Carney, governor of the Bank of England.

Mark Carney, governor of the Bank of England.