The Bank of England took steps to ensure British banks keep lending and insurers do not dump corporate bonds. Its Governor, Mark Carney, says the economic risks it warned of before the vote to leave the European Union had started to materialize, as Laura Frykberg reports.
A boost for British banks. To bolster them against the Brexit blues. Bank of England governor Mark Carney has lowered banks' capital requirements. In the hope that Britain, will keep borrowing. SOUNDBITE (English) BANK OF ENGLAND GOVERNOR MARK CARNEY, SAYING: "It means that three-quarters of UK banks accounting for 90 percent of the stock of UK lending will immediately have greater flexibility to supply credit to UK households and firms. " The buffer for banks was raised after the global financial crisis. But the Brexit vote has led to market volatility, and a fear that banks won't lend. Carney says the new rules with prevent that, a warning though, all hands should now be on deck. SOUNDBITE (English) BANK OF ENGLAND GOVERNOR MARK CARNEY, SAYING: "The future potential of this economy and its implications for jobs, real wages and wealth are not the gifts of the Bank of England, but will be driven by major decisions made by others within the public and private sectors." They may need to act fast. Service sector growth slowed last month to a three-year low. Sending business expectations to their weakest since the end of 2012. (SOUNDBITE) (English) WILSON KING INVESTMENT MANAGEMENT, HEAD OF RESEARCH, RICHARD HUNTER, SAYING: "They are going to clearly have to get to to the situation where we have more clarity from the UK and from Brussels before they can start committing any further capital spending." The UK's biggest department store John Lewis has also reported a slower sales growth last week. Signs the Brexit vote is influencing shoppers too.