Bank of England predicts Brexit fallout

The Bank of England escalated its warnings about the fallout from a British vote to leave the European Union next week, saying it could harm the global economy and sterling looked increasingly likely to fall further after an “Out” decision.

The BoE’s monetary policymakers also discussed the Bank’s contingency plans to protect the banking system in the event of an “Out” vote, including closer supervision of banks to make sure they have access to the liquidity they need.

They said the referendum was the largest immediate risk facing British financial markets, repeating previous language about the vote but this time they said markets and economies around the world could be at risk too.

“Through financial market and confidence channels, there are also risks of adverse spill-overs to the global economy,” minutes of the June 15 meeting of the Bank’s Monetary Policy Committee said.

Billions of dollars have been wiped off global stock markets in the run-up to the June 23 referendum and yields on government bonds in several countries have hit record lows.

Bank of England Governor Mark Carney has faced increasingly hostile criticism from supporters of a British exit from the EU who accuse him and the Bank of making unnecessary warnings about the risk of a hit to the economy from a Brexit vote.

Carney said the Bank has a duty to spell out what is likely to happen to the economy. Other institutions have also warned of a hit from a Brexit vote and the IMF may detail forecasts today.

The BoE’s nine rate-setters voted unanimously to keep interest rates at their record low of 0.5% at their meeting, the BoE said