Brexit likely to send pound plunging, warns the Bank of England


The Bank of England has warned it's "increasingly probable" that Brexit would send the pound plunging.

It added referendum uncertainty is already hitting the housing market as Britons put spending decisions on hold.

Policymakers sounded the alarm once more over the impact on the economy of a vote to leave the EU - they said uncertainty caused by the referendum was seeing delays in "major economic decisions" among households and in the corporate sector.

Nigel Farage and the Vote Leave bus going past Westminster
If Vote Leave are victorious in the referendum the pound would likely plunge (Philip Toscano/PA)

This is sparking a slowdown in the sale of houses and cars. In the corporate sector, commercial real estate transactions and deals are being put on ice, according to the Bank.

The Bank added that the result of the June 23 poll remained the "largest immediate risk" facing financial markets - not just in the UK, but worldwide.

All nine-members of the Monetary Policy Committee (MPC) voted to keep interest rates on hold at 0.5%, where they have been since March 2009.

Bank of England
The Bank of England has said the result of the referendum is the "largest immediate risk" worldwide (Stefan Rousseau/PA)

In the minutes of the decision, the Bank reiterated warnings that a Brexit vote could lead to a "materially lower" growth outlook and ramp up inflation as the pound was likely to plunge in value.

The Bank added that recent volatility in the pound following polls which suggested the Vote Leave campaign was taking the lead, meant it was "increasingly probable" that sterling could suffer a sharp fall in the event of a Brexit.

The pound hit two-month lows against the euro and US dollar earlier this week, while the FTSE 100 Index in London has plunged below 6,000 for the first time in four months.

Mark Carney
Mark Carney has warned that a Brexit could trigger a recession (Dylan Martinez/PA)

The latest warning sees the Bank wade back into the referendum debate just a week before the vote.

Carney has already warned that a Brexit could trigger a recession in the UK - two quarters of falling output in a row - which has infuriated Vote Leave campaigners.