As the UK’s constitution starts to map out the formative steps after the EU referendum result, the UK’s financial institutions and trade bodies have reacted.
A summary of their statements is included here:
Bank of England governor Mark Carney
“Inevitably, there will be a period of uncertainty and adjustment following this result.
“There will be no initial change in the way our people can travel, in the way our goods can move or the way our services can be sold.
“And it will take some time for the United Kingdom to establish new relationships with Europe and the rest of the world.
Some market and economic volatility can be expected as this process unfolds.
“But we are well prepared for this. The Treasury and the Bank of England have engaged in extensive contingency planning and the chancellor and I have been in close contact, including through the night and this morning.
“The bank will not hesitate to take additional measures as required as those markets adjust and the UK economy moves forward.
These adjustments will be supported by a resilient UK financial system – one that the Bank of England has consistently strengthened over the last seven years.
“The capital requirements of our largest banks are now 10 times higher than before the crisis. The Bank of England has stress tested them against scenarios more severe than the country currently faces.
“As a result of these actions, UK banks have raised over £130bn of capital, and now have more than £600bn of high quality liquid assets.
“Why does this matter?
“This substantial capital and huge liquidity gives banks the flexibility they need to continue to lend to UK businesses and households, even during challenging times. Moreover, as a backstop, and to support the functioning of markets, the Bank of England stands ready to provide more than £250bn of additional funds through its normal facilities.
“The Bank of England is also able to provide substantial liquidity in foreign currency, if required. We expect institutions to draw on this funding if and when appropriate, just as we expect them to draw on their own resources as needed in order to provide credit, to support markets and to supply other financial services to the real economy.”
“In the coming weeks, the bank will assess economic conditions and will consider any additional policy responses.”
“A few months ago, the bank judged that the risks around the referendum were the most significant, near-term domestic risks to financial stability.
“To mitigate them, the Bank of England has put in place extensive contingency plans. These begin with ensuring that the core of our financial system is well-capitalised, liquid and strong.
“This resilience is backed up by the Bank of England’s liquidity facilities in sterling and foreign currencies. All these resources will support orderly market functioning in the face of any short-term volatility.
“The bank will continue to consult and cooperate with all relevant domestic and international authorities to ensure that the UK financial system can absorb any stresses and can concentrate on serving the real economy.
“That economy will adjust to new trading relationships that will be put in place over time.
“It is these public and private decisions that will determine the UK’s long-term economic prospects.”
Financial Conduct Authority (FCA) statement
“This has significant implications for the UK. The FCA is in very close contact with the firms we supervise as well as the Treasury, the Bank of England and other UK authorities, and we are monitoring developments in the financial markets.
“Much financial regulation currently applicable in the UK derives from EU legislation. This regulation will remain applicable until any changes are made, which will be a matter for government and Parliament.
“Firms must continue to abide by their obligations under UK law, including those derived from EU law and continue with implementation plans for legislation that is still to come into effect.
“Consumers’ rights and protections, including any derived from EU legislation, are unaffected by the result of the referendum and will remain unchanged unless and until the Government changes the applicable legislation.
“The longer term impacts of the decision to leave the EU on the overall regulatory framework for the UK will depend, in part, on the relationship that the UK seeks with the EU in the future. We will work closely with the government as it confirms the arrangements for the UK’s future relationship with the EU.”
Director general of the CBI Carolyn Fairbairn
“The British people’s vote to leave the EU is a momentous turning point in our history. The country has spoken and it’s for us all to listen.
“Many businesses will be concerned and need time to assess the implications. But they are used to dealing with challenge and change and we should be confident they will adapt.
“The urgent priority now is to reassure the markets. We need strong and calm leadership from the Government, working with the Bank of England, to shore up confidence and stability in the economy.
“The choices we make over the coming months will affect generations to come. This is not a time for rushed decisions.
“The CBI will be consulting its members and business is committed to working with Government to shape the best possible conditions for future prosperity.”
By Marcel LeGouais