Bank’s Brexit fallout plan working, insists governor Carney

BoE governor Mark Carney maintains the Bank has a clear plan post-Brexit
BoE governor Mark Carney maintains the Bank has a clear plan post-Brexit

Bank of England governor Mark Carney said plans to contain the fallout from the Brexit vote were working as he announced a move to boost lending to households and businesses by up to £150 billion.

He assured 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 hailed the Bank’s decision to loosen rules for lenders as an “important move”.

He added that he was “meeting major banks in Downing Street shortly to discuss response to referendum result”.

“We need great national effort to steer UK through,” he said.

The Bank will reduce the capital required to be held on banks’ balance sheets by £5.7 billion, which it said would help bolster their ability to lend by up to £150 billion.

The so-called countercyclical capital buffer rate has been slashed to zero from 0.5% and will remain at that level for at least a year, it said.

Mr Carney described it as a “major change”, meaning three-quarters of major UK banks have seen their ability to lend bolstered.

“Today’s action means that UK households and business who want to seize viable opportunities in a post-referendum world can be confident they will be supported by the financial system,” he said.