The Bloomberg index of housebuilders has slumped more than 30% since the referendum.
Mark Carney is speaking...live now on behalf of Financial Policy Committee of BoE, as the most recent Financial Stability Report is released
"The UK has entered a profound period of uncertainty" MC
Part of a 4 part plan:
1. Identify risk to financial stability:
- current account deficit at extreme risk
- commercial real estate will tighten lending
- foreign CP inward investment has fallen by 50%
- tightened risk in domestic house holders due to financial volatility making UK households extremely vulnerable especially with high levels of indebtedness. Ratio of household debt to income is 134%
2. Measures taken over years to build Financial resilience:
- banks in better shape than ever on tier 1 capital stress tests and able to withstand and keep lending based on twice the impact of the 2008 financial collapse
3. Implement contingency measures to help financial stability:
- auctions of QE
- expect institutions to draw on as needed
4. Measures to protect jobs & growth:
- legally can use 50% of liquidity buffers in difficult times to enable continued lending
- banks have immediately greater flexibility to lend to biz and household and allows ability to lend an extra £150 billion. Last year total lending was only £60 billion
- this enables opportunities by biz to be capitalised upon.
Conclusion:
Uncertainty reigns and the BoE can do very little to help but can help with the rules and liquidity flexing to support the real economy.
Bank will continue to consult with all international financial institutions.
Markets are adjusting to change, with ftse 100 rebounding, but ftse 250 and smaller and those in 100 with largely UK business being severely impacted.
Sent from my iPhone using
DCUK Forum
