Bank of England pledges £250 billion liquidity

The Bank of England has set aside an additional £250 billion of liquidity and will also be able to provide institutions with forex if required.

In a statement, governor Mark Carney stressed that the Bank had ‘extensive contingency planning’ in place and he had been in discussions with chancellor George Osborne throughout the night.

He said BoE ‘will not hesitate to act’ to support the economy in the wake of the shock Brexit vote.

Carney also moved to reassure about the banking sector, which has been battered upon the news with Barclays down 23% and Royal Bank of Scotland 18% at 8:54am.

‘The Bank of England has stress-tested these banks against scenarios far worse than the one the UK is facing,’ he said.

Carney noted that the banking sector has raised £130 billion in fresh capital since he has been in the post and is sitting on £600 billion of ‘high quality liquid assets’.

He added that the bank will continue to ‘monitor the economy closely’ and ‘won’t hesitate to act’ if needed.

Royal London Asset Management chief investment officer Piers Hillier said he expected ‘unstable market conditions’ for between three and five years.

‘On the back of this morning’s result we expect the UK will fall into a recession,’ he said.

‘Unfortunately I see unstable market conditions lasting for between three and five years whilst new trade agreements are drawn up.’

‘It is our view that the UK government will be left with no choice but to stimulate the economy through fiscal and monetary means, flooding the system with liquidity if necessary.’

OMGI’s Richard Buxton, meanwhile, branded Brexit the world’s first ‘DIY recession’.