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Bank of England warns Brexit uncertainty is hurting the economy – business live Bank of England warns Brexit uncertainty is hurting the economy – business live
(35 minutes later)
12.57pm BST
12:57
ING predicts emergency rate cut if Brexit win
Some economists believe the Bank of England would slash interest rates to fresh record lows if the UK votes to leave the EU next week.
James Knightley of ING predicts an emergency rate cut on Friday if the Leave campaign wins:
He writes:
In the case of Brexit, there is a high probability that inflation rises sharply as a result of currency weakness, but we think that the BoE will look through this, as they did in 2011. Instead we think the focus will be on the growth risks and financial market turbulence, which would dampen domestic inflation pressures over the medium term.
Consequently, we would expect a 25bp rate cut on June 24th.
Andrew McPhillips, chief economist at Yorkshire Building Society, also expects a cut:
“It is likely that if the UK votes to leave the EU, the MPC will cut base rate in an attempt to stabilise the economy.
Though this could lead to an increase in inflation due to the depreciation of Sterling, the Bank is likely to be willing to trade that off against trying to maintain economic growth and avoid the risk of increasing unemployment.
12.52pm BST
12:52
Liberal Democrat leader Tim Farron, a Remain campaigner, has welcomed the Bank of England’s warning:
“This is yet more independent evidence that our economy could plummet if we leave Europe. We cannot afford to let people like Norman Lamont crash the economy for a second time. This is not a political parlour game - people’s jobs, homes and businesses are at risk.”
[Lord Lamont, a Leave supporter, was chancellor on Black Wednesday when Britain crashed out of the European exchange rate mechanism]
12.35pm BST
12:35
The pound has fallen since the Bank of England minutes hit the wires.
It has lost one cent against the US dollar to hover around $1.41, near to a two-month low.
Traders are also reacting to yet another poll showing Leave ahead. Survation reports that 45% of voters support Leave, with 42% backing Remain (and the rest undecided).
12.27pm BST
12:27
Bank of England isn't pulling its punches. pic.twitter.com/G5eU9w4J7E
12.22pm BST12.22pm BST
12:2212:22
Bank minutes: Referendum uncertainty across the economyBank minutes: Referendum uncertainty across the economy
The Bank of England’s policymakers heard plenty of evidence that the UK economy has weakened due to next week’s referendum vote.The Bank of England’s policymakers heard plenty of evidence that the UK economy has weakened due to next week’s referendum vote.
The minute of the MPC meeting state that:The minute of the MPC meeting state that:
In the corporate sector, this included a sharp decline in the value of commercial real estate transactions and M&A, and reports of delayed business investment.In the corporate sector, this included a sharp decline in the value of commercial real estate transactions and M&A, and reports of delayed business investment.
Evidence from the Bank’s Agents had suggested increased delays in corporate decision making, which was corroborated by a Deloitte survey of chief financial officers.Evidence from the Bank’s Agents had suggested increased delays in corporate decision making, which was corroborated by a Deloitte survey of chief financial officers.
Survey information from Markit/CIPS and the BCC showed that for a material proportion of responding firms the referendum was having a detrimental effect on business activity, sometimes significantly so.Survey information from Markit/CIPS and the BCC showed that for a material proportion of responding firms the referendum was having a detrimental effect on business activity, sometimes significantly so.
They also point to signs that demand for new cars and houses has fallen recently.They also point to signs that demand for new cars and houses has fallen recently.
However.... the Bank also points out that other surveys have shown consumer demand is solid (such as this morning’s strong retail sales).However.... the Bank also points out that other surveys have shown consumer demand is solid (such as this morning’s strong retail sales).
Minutes of @bankofengland attribute a fall in property and even car sales to referendum uncertainty. pic.twitter.com/GSqBaGVmFnMinutes of @bankofengland attribute a fall in property and even car sales to referendum uncertainty. pic.twitter.com/GSqBaGVmFn
12.17pm BST12.17pm BST
12:1712:17
The full Bank of England minutes are here (sorry, that earlier link was to the summary) The full Bank of England minutes are here.
Updated
at 12.57pm BST
12.13pm BST12.13pm BST
12:1312:13
You can read a summary of the Bank of England’s minutes yourselves, here.You can read a summary of the Bank of England’s minutes yourselves, here.
UpdatedUpdated
at 12.16pm BSTat 12.16pm BST
12.12pm BST12.12pm BST
12:1212:12
The Bank of England appears to have hardened its Brexit warnings, despite pressure from the Leave campaign to cool things down.The Bank of England appears to have hardened its Brexit warnings, despite pressure from the Leave campaign to cool things down.
Breaking: Bank of England strengthens its warnings on EU referendum risk - saying uncertainty could "spill-over" into global marketsBreaking: Bank of England strengthens its warnings on EU referendum risk - saying uncertainty could "spill-over" into global markets
Main #EURef related section of @bankofengland minutes today. Language similar to previous, if a little amplified pic.twitter.com/ytm4G6CZvMMain #EURef related section of @bankofengland minutes today. Language similar to previous, if a little amplified pic.twitter.com/ytm4G6CZvM
12.10pm BST12.10pm BST
12:1012:10
BoE: Pound will probably tumble if Leave campaign winBoE: Pound will probably tumble if Leave campaign win
Katie AllenKatie Allen
The Bank of England has also issued a fresh warning that the pound will tumble in the event of a Brexit vote.The Bank of England has also issued a fresh warning that the pound will tumble in the event of a Brexit vote.
The minutes state that:The minutes state that:
“On the evidence of the recent behaviour of the foreign exchange market, it appears increasingly likely that, were the UK to vote to leave the EU, sterling’s exchange rate would fall further, perhaps sharply.”“On the evidence of the recent behaviour of the foreign exchange market, it appears increasingly likely that, were the UK to vote to leave the EU, sterling’s exchange rate would fall further, perhaps sharply.”
The Bank also revealed its top policymakers had been briefed by staff on contingency planning for the referendum as it readies measures to prevent markets seizing up in the event of a leave vote next week.The Bank also revealed its top policymakers had been briefed by staff on contingency planning for the referendum as it readies measures to prevent markets seizing up in the event of a leave vote next week.
12.06pm BST12.06pm BST
12:0612:06
Bank of England warns about referendum uncertaintyBank of England warns about referendum uncertainty
The Bank of England has warned that next week’s EU referendum is already hurting the UK economy.The Bank of England has warned that next week’s EU referendum is already hurting the UK economy.
It says there are signs that major spending decisions are being delayed, such as car and house purchases, as consumers and businesses wait to see if the UK votes to leave the European Union.It says there are signs that major spending decisions are being delayed, such as car and house purchases, as consumers and businesses wait to see if the UK votes to leave the European Union.
In the minutes of this month’s monetary policy meeting, just released, they say:In the minutes of this month’s monetary policy meeting, just released, they say:
The outcome of the referendum continues to be the largest immediate risk facing UK financial markets, and possibly also global financial markets.The outcome of the referendum continues to be the largest immediate risk facing UK financial markets, and possibly also global financial markets.
While consumer spending has been solid, there is growing evidence that uncertainty about the referendum is leading to delays to major economic decisions that are costly to reverse, including commercial and residential real estate transactions, car purchases, and business investmentWhile consumer spending has been solid, there is growing evidence that uncertainty about the referendum is leading to delays to major economic decisions that are costly to reverse, including commercial and residential real estate transactions, car purchases, and business investment
UpdatedUpdated
at 12.23pm BSTat 12.23pm BST
12.02pm BST
12:02
BoE policymakers were unanimous in leaving borrowing costs on hold, and also leaving the quantitative easing programme unchanged.
Bank of England maintains #BankRate at 0.5% and the size of the Asset Purchase Programme at £375 billion...
...Minutes of the MPC meeting reveal unanimous vote on #BankRate and Asset Purchases
12.00pm BST
12:00
Bank of England leaves rates on hold
Breaking: The Bank of England has left interest rates unchanged at their record low of 0.5%, continuing a run dating back to March 2009.
And here come the minutes of the meeting.....
11.50am BST
11:50
10 minutes to go.....
Stand by for @bankofengland int rate decision/minutes. No doubt they’ll warn abt Brexit impact (again). But will they go further than words?
11.24am BST
11:24
Bad news from Greece -- the unemployment rate has jumped to 24.9% in the first quarter of this year.
That’s a rise from 24.4% in October-December.
11.12am BST
11:12
Indonesia just surprised the markets by unexpectedly cutting interest rates!
*BANK INDONESIA CUTS REFERENCE RATE TO 6.50% FROM 6.75%
Most economists surveyed by Reuters had expected the BoI to hold, butt instead it has eased monetary policy to in a bid to stir growth.
11.10am BST
11:10
Consumer goods giant Unilever has become the latest UK company to encourage staff to vote Remain next week.
It has sent a letter to all 100,000 staff, signed by CEO Paul Polman and his three predecessors, saying the firm would be “negatively impacted” by Brexit, adding:
“We therefore hope that in the interests of Unilever, the UK,Europe, and indeed the wider global economy, the UK will choose to Remain and thereby continue to play a central role in Unilever’s long-term growth and prosperity.”
So not actually a demand that staff reject Brexit, but a clear nudge.....
10.45am BST
10:45
Mark Carney blasts Brexit criticism
The Bank of England have now published governor Mark Carney’s letter to Leave campaigner Bernard Jenkin MP.
It’s a tinglingly robust slapdown to Jenkin’s criticism that the BoE shouldn’t make “public comments” about the referendum.
Carney begins by saying:
I am responding to your letter to dispel immediately the numerous and substantial misconceptions it contained.
And he then explains that the Bank of England has respected its independence, and stuck firmly to its remit when it has talked about Brexit dangers.
It’s online here.
..Governor Mark Carney says no hits back in letter to Leave director @bernardjenkin criticises his "misconceptions" pic.twitter.com/KldisaYb2W
Updated
at 10.54am BST
10.21am BST
10:21
The US Federal Reserve must take some blame for today’s selloff.
Last night, the Fed cited weakening economic growth as one reason for leaving interest rates on hold.
And that has dampened the mood in the City, says Chris Beauchamp of City firm IG:
There has been little to comfort investors over the past 24 hours, which is why yesterday’s gains have withered on the vine. The Fed meeting was perhaps their best hope, but even here Janet Yellen was not able to offer much in the way of good news.
10.01am BST
10:01
After two hours of trading, every European stock market has lost ground.
Worries about the global economy, and central bankers’ ability to stimulate growth, are hitting shares -- along with Brexit concerns.
Avtar Sandu, senior commodities manager at Phillip Futures in Singapore, told Reuters:
The market is going to be soft until next week. The fear is that if the British actually decide to leave the EU there may be some sort of contagion.
Investors are also alarmed by the big moves in Japan overnight, with shares sliding and the yen soaring.
Sea of red on #Markets ahead of #BoE decision -will Mark Carney speak out against #EUreferendum again? Japan markets tumble 3% after no move
9.39am BST
09:39
UK retail sales smash forecasts
Boom! UK retail sales jumped by 0.9% last month, beating forecasts of a 0.2% rise.
A surge in clothing sales led the recovery, according to the Office for National Statistics.
Sales were 6.0% higher than a year ago, the biggest jump since September 2015.
Clothing sales jumped by 4.3% during the month, the biggest rise in two years. Brits may have splashed out on new summer outfits as the sun made a rare (if brief) appearance through the clouds.
This doesn’t suggest shoppers are hunkering back in fear that Britain is about to leave the EU. Unless....
*U.K. MAY RETAIL SALES RISE 0.9%; MEDIAN EST. 0.2% GAINNotable rises in tinned food, duct tape, bottled water and shortwave radios.
Dear @ONS was the surge in UK Retail Sales due to purchases of tinned food and spades for digging underground shelters? #Brexit
Updated
at 9.44am BST