Amid financial turbulence following the EU referendum, Chancellor George Osborne sought to reassure the financial sector and the wider public that the UK economy’s resilience would overcome the challenges ahead (1).
“Our economy is about as strong as it could be to confront the challenge our country now faces,” he told a news conference at Britain’s finance ministry on Monday (1).
The Chancellor went on to confirm that there would not be an imminent emergency budget in light of the result, and any change in fiscal plans is to be delayed until succession of the Prime Minister later this year (1).
Monday saw continued upheaval in the financial markets; the pound sunk further, falling 3.2% to $1.32260, hitting a 31-year low during the course of the day. The FTSE 100 index also dropped further, down 2.6% (2).
Credit ratings firm, Moody’s, downgraded the UK’s economic outlook from ‘stable’ to ‘negative’ (3), and yields on 10-year government bonds fell below 1% for the first time (2).
Capital Economics economist, Julian Jessop, said it was important to keep the sharp market movements in perspective when looking at the magnitudes of one-day movements. “Equities had rallied strongly ahead of the UK referendum result in anticipation of a vote to remain in the EU… Friday’s collapse in the FTSE 100 simply reversed that move, leaving equities little changed over the week,” he explained (2).
- (1) – Osborne says further volatility ahead but economy is strong – Reuters
- (2) – Sterling falls and bank, airline and property shares tumble – BBC News
- (3) – Brexit: Moody’s downgrades UK’s credit outlook from ‘stable’ to ‘negative’ – Independent