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Bank of England to take 'all necessary steps' after EU vote sparks economy fears

Published 24/06/2016

The Bank of England has said it will take "all necessary steps" to ensure monetary and financial stability in the wake of the Brexit vote.

In a statement issued following Britain's referendum on the European Union, the Bank said: "The Bank of England is monitoring developments closely.

"It has undertaken extensive contingency planning and is working closely with HM Treasury, other domestic authorities and overseas central banks. The Bank of England will take all necessary steps to meet its responsibilities for monetary and financial stability."

The comments come after economists began to downgrade their forecasts for UK growth, with a recession forecast unless a quick deal with the EU can be done.

The governor of the Bank Mark Carney is to make a statement after Prime Minister David Cameron has delivered his speech, expected within the next few hours.

Economists predict that Mr Carney could move to cut interest rates or expand the Bank's quantitative easing programme.

Britain is also set to lose its last remaining triple-A credit rating, with S&P saying that maintaining it is "untenable".

The pound has crashed to its lowest level in over 30 years, plunging 10% against the dollar overnight to 1.33 US dollars, a low not seen since 1985 as the Leave campaign headed for victory.

Sterling was down against every major currency group, including the euro and the Japanese Yen.

Samuel Tombs, chief UK economist at Pantheon Macroeconomics, said: "UK voters have opted for Brexit. If fully followed through, this will be an act of economic self-harm with global ramifications. The scintilla of hope is that a revised deal can be negotiated with a panicked EU.

"Unless a swift deal can be done, however, the UK is likely to enter recession. Businesses will hold back from investing, credit costs will rise, and import prices will soar, squeezing households' spending power."

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