Following the Brexit vote, the outlook for Britain’s financial stability “remains challenging” and is dependent on an orderly exit from the European Union, the Bank of England has said.
In its Financial Stability Report the Bank said that as a result of the June 23 vote, the likelihood of risks to financial stability “remains elevated”.
The report said: “It will take time to clarify the United Kingdom’s new relationships with the European Union and the rest of the world as well as for the UK economy to adjust to these changes.
“The orderliness of the adjustment will influence the risk to financial stability.”
“Changes to the trading relationship between the United Kingdom and the European Union may require firms to alter their operations and the services they provide.
“If any such adjustments take place in a short timeframe, there could be a greater risk of disruption to services provided to the European real economy, which could spill back to the UK economy through trade and financial linkages.”
The Bank said that despite the fall in sterling, a reduction in commercial property prices and indications of reduced investment into the UK, economic activity and business sentiment have recovered from “low points” prevailing immediately after the referendum and are “materially stronger than had been expected in July”.