Bank of England relaxes rules in bid to boost lending by £150bn as pound plunged to 31-year low
Mark Carney urged public to be 'prudent' amid Brexit 'uncertainty'
THE Governor of the Bank of England today relaxed rules for banks in a bid to boost lending by up to £150billion as he warned the UK is “entering a period of uncertainty”
The announcement came as sterling plunged to a new 31-year-low and the FTSE100 stuttered this morning.
The heads of major banks have headed to Downing Street for crunch talks with the Chancellor to discuss the industry's response to UK's decision to leave the European Union.
The central bank said risks it had identified before the referendum were starting to materialize, including lower demand for commercial property.
In its report, the Bank said: “"There is evidence that some risks have begun to crystallize. The current outlook for 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 UK to establish new relationships with the EU and the rest of the world.”
This morning the pound resumed its slide against the dollar ahead of the Bank’s financial report, trading at $1.3190. The pound was also down more than one per cent against the euro to €1.1787.
It came as shares in property firms dragged the FTSE100 down, causing Standard Life Investments to suspend trading in its UK property fund.
The company said it has taken the move because of “exceptional market circumstances” following the result of the EU referendum result.
But at a press conference this morning Governor of the Bank of England Mark Carney sought to assure Britons they can remain confident that they can borrow as needed after the Bank took action to relax funding rules for lenders.
But on unveiling the Bank's twice-yearly Financial Stability Report, Mr Carney warned over the vulnerability of households with high levels of debt to an economic slowdown.
He stopped short of repeating caution over a possible recession, but said there was the "prospect of a material slowing of the economy" following the Brexit vote, while the report said the outlook for financial stability was "challenging".
The Bank's move to help bolster the ability of banks to lend comes as part of a raft of measures announced since the referendum decision to shore up the financial system and soothe nerves.
Mr Carney said: "The Bank has a clear plan. We are rapidly putting its main elements in place. And it is working."
Chancellor George Osborne welcomed the move this morning to boost lending capacity.
He also revealed the bosses of major banks were heading to No11 Downing Street this morning to discuss the banking industry's response to Brexit.
He warned: "We need great national effort to steer UK through."