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Mark Carney urges Britons to be 'prudent' after Brexit vote - business live Brexit crisis: Aviva suspends property trust as Mark Carney warns of 'crystallising' risks - business live
(35 minutes later)
1.23pm BST
13:23
Correction... the pound has actually fallen through $1.31 (so i’ve updated that last entry).
Sterling slips below $1.31 for first time since 1985 https://t.co/GPJmKhJUTa
1.17pm BST
13:17
Aviva’s decision to suspend its property trust has sent the pound reeling to a new 31-year low.
Sterling slumped to $1.3098 against the US dollar, down 1.8 cents, to a level not seen since 1985.
Updated
at 1.21pm BST
1.14pm BST
13:14
Aviva suspends property fund redemptions after Brexit vote
NEWSFLASH: Aviva, the savings and investment group, has suspended redemptions from its £1.8bn property fund.
It took the decision following the Brexit vote, which triggered a surge of requests from investors to pull their money out of its UK Property Trust.
That’s because the EU referendum could hurt the property sector, driving down the value of office blocks, supermarkets and factories.
Aviva blamed “extraordinary market circumstances”, a day after Standard Life became the first firm to freeze its property fund.
"Extraordinary market circumstances" - @avivainvestors suspends £1.7bn UK property fund. Some investors clear feel it's not worth that now.
An Aviva spokesperson said:
“We have acted to safeguard the interests of all our investors by suspending dealing in the fund with immediate effect.
“Suspension of dealing will give Aviva Investors greater control in managing cashflows and conducting orderly asset sales in order to meet our obligations to investors wishing to redeem their holdings.”
Breaking: Aviva becomes second firm to suspend UK property fund, citing "extraordinary market circumstances" https://t.co/OU8xL4ykoO
Laith Khalaf, senior analyst at City firm Hargreaves Lansdown, reckons more investment firms will freeze redemptions soon.
‘The dominos are starting to fall in the UK commercial property market, as yet another fund locks its doors on the back of outflows precipitated by the Brexit vote. It’s probably only a matter of time before we see other funds follow suit.
Updated
at 1.18pm BST
1.11pm BST
13:11
George Osborne has repeated his support for Mark Carney’s decision to ease the funding rules, allowing banks to lend more.
He’s told Sky News that the government’s financial reforms, making the banks ‘part of the solution in the UK economy, not part of the problem’ are paying off.
1.04pm BST1.04pm BST
13:0413:04
Economics professor David Blanchflower, a former Bank of England policymaker, has given Mark Carney full marks for today’s performance:Economics professor David Blanchflower, a former Bank of England policymaker, has given Mark Carney full marks for today’s performance:
most impressed by Mark Carney's performance post Brexit vote been on top of things an adult in room while politicians play children's gamesmost impressed by Mark Carney's performance post Brexit vote been on top of things an adult in room while politicians play children's games
12.55pm BST12.55pm BST
12:5512:55
Snap Summary: Mark Carney tackles the Brexit crisisSnap Summary: Mark Carney tackles the Brexit crisis
Resigning from high office (or not-so-high office) is in fashion this summer. So it’s nice to see one senior official actually knuckling down and doing his job.Resigning from high office (or not-so-high office) is in fashion this summer. So it’s nice to see one senior official actually knuckling down and doing his job.
Today’s press conference had one key message – Britain’s economy is suffering from the Brexit vote (as predicted), and its central bankers are on the case.Today’s press conference had one key message – Britain’s economy is suffering from the Brexit vote (as predicted), and its central bankers are on the case.
1) Bank of England governor Mark Carney has warned that the risks posed by the UK’s referendum on EU membership have “begun to crystallise”, and posing new dangers to the economy.1) Bank of England governor Mark Carney has warned that the risks posed by the UK’s referendum on EU membership have “begun to crystallise”, and posing new dangers to the economy.
Presenting the BoE’s latest financial stability report, Carney said:Presenting the BoE’s latest financial stability report, Carney said:
The UK has entered a period of uncertainty and significant economic adjustment.The UK has entered a period of uncertainty and significant economic adjustment.
The efforts of the Bank of England will not be able fully and immediately to offset the market and economic volatility that can be expected while this adjustment proceeds.”The efforts of the Bank of England will not be able fully and immediately to offset the market and economic volatility that can be expected while this adjustment proceeds.”
2) The BoE isn’t sitting on its hands. Slashing the ‘counter-cyclical capital reserves’ will help banks to pump £150bn of extra lending into the economy.2) The BoE isn’t sitting on its hands. Slashing the ‘counter-cyclical capital reserves’ will help banks to pump £150bn of extra lending into the economy.
But Carney also warned that this will only work if businesses and individuals actually want to borrow. And despite the slide in the pound (which could help exporters), there are clear signs that the the economy is slowing.But Carney also warned that this will only work if businesses and individuals actually want to borrow. And despite the slide in the pound (which could help exporters), there are clear signs that the the economy is slowing.
3) Prudence used to be a Gordon Brown favourite, before the former chancellor and PM was engulfed by the financial crisis of 2007-08.3) Prudence used to be a Gordon Brown favourite, before the former chancellor and PM was engulfed by the financial crisis of 2007-08.
But she has a new friend today. Asked for his advice to the UK, Carney declared that people must remain prudent:But she has a new friend today. Asked for his advice to the UK, Carney declared that people must remain prudent:
If you are taking out a mortgage, at some stage, during the life of that mortgage, conditions will be difficult.If you are taking out a mortgage, at some stage, during the life of that mortgage, conditions will be difficult.
So you want to be sure, as a household or an individual, that you can repay that mortgage - you don’t want to lose your house or flat.So you want to be sure, as a household or an individual, that you can repay that mortgage - you don’t want to lose your house or flat.
4) The bank is watching closely for signs that Britain’s most indebted households are struggling post-Brexit vote.4) The bank is watching closely for signs that Britain’s most indebted households are struggling post-Brexit vote.
There could be casualties out there...There could be casualties out there...
We have been concerned for some time about these issues,the interplay between high levels of household indebtedness and the housing market and the possibility that there will be more vulnerable households.”We have been concerned for some time about these issues,the interplay between high levels of household indebtedness and the housing market and the possibility that there will be more vulnerable households.”
Corrected. UK household debt is 132% of disposable income, from BoE's Stability Report pic.twitter.com/oAhxBl4gV5Corrected. UK household debt is 132% of disposable income, from BoE's Stability Report pic.twitter.com/oAhxBl4gV5
5) Carney reiterated that Britain’s financial sector is in much better shape than before the financial crisis, so we should avoid another credit crunch.5) Carney reiterated that Britain’s financial sector is in much better shape than before the financial crisis, so we should avoid another credit crunch.
The core of this system is very strong, we may see some volatility, we may see things move around, but the system is going to be there for someone who wants to buy a house or a business person with a viable plan.”The core of this system is very strong, we may see some volatility, we may see things move around, but the system is going to be there for someone who wants to buy a house or a business person with a viable plan.”
6) ....but the same can’t be said of the current account deficit, which has widened to record levels.6) ....but the same can’t be said of the current account deficit, which has widened to record levels.
Carney warned that a weaker pound won’t magically solve Britain’s balance of payments woes (the fact we import more than we export). The danger is that overseas investors now shun the UK.Carney warned that a weaker pound won’t magically solve Britain’s balance of payments woes (the fact we import more than we export). The danger is that overseas investors now shun the UK.
In the governor’s words:In the governor’s words:
In and of itself, the movement in sterling should be beneficial for the current account.In and of itself, the movement in sterling should be beneficial for the current account.
But... the pace of investment will also be quite important in terms of where the balance is going over time.But... the pace of investment will also be quite important in terms of where the balance is going over time.
7) Carney has little time for those who point to the recovery in the FTSE 100 index (now above its pre-vote levels).7) Carney has little time for those who point to the recovery in the FTSE 100 index (now above its pre-vote levels).
It’s better to look at the index of smaller firms, the FTSE 250 index, he says:It’s better to look at the index of smaller firms, the FTSE 250 index, he says:
“In terms of the equity markets I would focus a little bit more on the domestically-focused stock, the FTSE 250 or the component of FTSE 100 that is principally serving this economy.“In terms of the equity markets I would focus a little bit more on the domestically-focused stock, the FTSE 250 or the component of FTSE 100 that is principally serving this economy.
8) Politics is for politicians.8) Politics is for politicians.
Carney was long rumoured to fancy a shift to Canadian politics, before a certain Justin Trudeau took the Liberal party to victory.Carney was long rumoured to fancy a shift to Canadian politics, before a certain Justin Trudeau took the Liberal party to victory.
Today he faces criticism from Leave campaigners, who will have their hands on (or at least near) the levers of power in the UK.Today he faces criticism from Leave campaigners, who will have their hands on (or at least near) the levers of power in the UK.
But the governor brushed them aside, saying the Bank will keep doing its job and work with whoever is in power.But the governor brushed them aside, saying the Bank will keep doing its job and work with whoever is in power.
UpdatedUpdated
at 1.00pm BSTat 1.00pm BST
12.08pm BST12.08pm BST
12:0812:08
Carney: We'll work with BrexitersCarney: We'll work with Brexiters
Last question goes to my colleague Nils Pratley.Last question goes to my colleague Nils Pratley.
He asks Mark Carney about the criticism piled on the Bank from Leave campaigners such as Andrea Leadsom (now in the running to become prime minister).He asks Mark Carney about the criticism piled on the Bank from Leave campaigners such as Andrea Leadsom (now in the running to become prime minister).
Carney replies that “we’re not asking people to make our lives easier”Carney replies that “we’re not asking people to make our lives easier”
This is a technocratic institution. We’ll work with whoever is in government.This is a technocratic institution. We’ll work with whoever is in government.
In short, the Bank will keep sticking to its remit, publishing the reports expected under its remit. And that includes flagging up threats to the UK economy.In short, the Bank will keep sticking to its remit, publishing the reports expected under its remit. And that includes flagging up threats to the UK economy.
Carney on conflicts with MPs: We're not asking people to make our lives easier...it's our job to call it as we see itCarney on conflicts with MPs: We're not asking people to make our lives easier...it's our job to call it as we see it
That’s the end of the press conference.That’s the end of the press conference.
12.02pm BST12.02pm BST
12:0212:02
Q: Could the Bank of England really ease monetary policy much lower - some economists suggest new quantitative easing (buying bonds with new money) wouldn’t have much impact?Q: Could the Bank of England really ease monetary policy much lower - some economists suggest new quantitative easing (buying bonds with new money) wouldn’t have much impact?
Carney declines to comment on monetary policy – as today’s meeting is about financial stability.Carney declines to comment on monetary policy – as today’s meeting is about financial stability.
I think Carney should get some brightly coloured hats, so ppl know when he has his FPC vs MPC hat on. ie stop asking about interest rates!I think Carney should get some brightly coloured hats, so ppl know when he has his FPC vs MPC hat on. ie stop asking about interest rates!
12.00pm BST12.00pm BST
12:0012:00
Q: Is the Bank of England worried about the prospect of Scotland breaking away from the UK?Q: Is the Bank of England worried about the prospect of Scotland breaking away from the UK?
That’s a double hypothetical, Carney says - there’s no 2nd referendum yet, let alone a decision.That’s a double hypothetical, Carney says - there’s no 2nd referendum yet, let alone a decision.
Carney says Scotland vote is hypothetical; there's no planned referendum, and we don't know regulatory environment that would be applicableCarney says Scotland vote is hypothetical; there's no planned referendum, and we don't know regulatory environment that would be applicable
11.58am BST11.58am BST
11:5811:58
Back to the Bank of England press conference:Back to the Bank of England press conference:
Q: What discussions have you had with other central banks about the referendum?Q: What discussions have you had with other central banks about the referendum?
We have had close contact with them, Carney replies, especially in the run-up to the vote. This was effective in building mutual understanding of the risks posed by Brexit, he says.We have had close contact with them, Carney replies, especially in the run-up to the vote. This was effective in building mutual understanding of the risks posed by Brexit, he says.
He points to the ‘currency swaps’ which allows central banks to share dollars, euros, pounds, yen etc with each other.He points to the ‘currency swaps’ which allows central banks to share dollars, euros, pounds, yen etc with each other.
And the global economy faces ‘notable’ spillovers, he adds.And the global economy faces ‘notable’ spillovers, he adds.
11.53am BST11.53am BST
11:5311:53
Government meeting with major banks about Brexit risks todayGovernment meeting with major banks about Brexit risks today
UK chancellor George Osborne has welcomed the BoE’s decision to ease bank capital rules.UK chancellor George Osborne has welcomed the BoE’s decision to ease bank capital rules.
Important move by @bankofengland using tools I gave them to reduce banks' capital requirements to boost lending capacity by up to £150bnImportant move by @bankofengland using tools I gave them to reduce banks' capital requirements to boost lending capacity by up to £150bn
He also reveals that major bank bosses are heading to his offices this morning, to discuss the crisisHe also reveals that major bank bosses are heading to his offices this morning, to discuss the crisis
Meeting major banks in Downing Street shortly to discuss response to referendum result. We need great national effort to steer UK throughMeeting major banks in Downing Street shortly to discuss response to referendum result. We need great national effort to steer UK through
11.51am BST11.51am BST
11:5111:51
The decision to cut the counter-cyclical capital buffers is one of several Brexit u-turns, tweets The Sun’s political editor:The decision to cut the counter-cyclical capital buffers is one of several Brexit u-turns, tweets The Sun’s political editor:
So; banks' capital reserves to be spent, deficit to go back up, AAA credit rating lost. Six years of economics reversed in 12 days #BrexitSo; banks' capital reserves to be spent, deficit to go back up, AAA credit rating lost. Six years of economics reversed in 12 days #Brexit
Hang on, though, didn’t The Sun back Brexit??!!Hang on, though, didn’t The Sun back Brexit??!!
UpdatedUpdated
at 11.52am BSTat 11.52am BST
11.48am BST11.48am BST
11:4811:48
Structure of property investment funds may need to be reconsidered following Standard Life suspension says FCA head Andrew BaileyStructure of property investment funds may need to be reconsidered following Standard Life suspension says FCA head Andrew Bailey
11.43am BST11.43am BST
11:4311:43
Some key points from Mark Carney’s briefing:Some key points from Mark Carney’s briefing:
Carney quite rightly focussing on liquidity support to underline confidence. Correctly anticipating further pressureCarney quite rightly focussing on liquidity support to underline confidence. Correctly anticipating further pressure
Carney says 2014 stress tests shows banks are resilient: system is there for anyone who wants to buy a houseCarney says 2014 stress tests shows banks are resilient: system is there for anyone who wants to buy a house
Carney advises consumers to be prudent post Brexit - just as he would if the UK was in the 10th year of a boomCarney advises consumers to be prudent post Brexit - just as he would if the UK was in the 10th year of a boom
#Carney: the law is the law, the rules are the rules, the system is the system. ie keep on keepin' on.#Carney: the law is the law, the rules are the rules, the system is the system. ie keep on keepin' on.