Chancellor George Osborne is holding crunch talks with UK bank bosses to coordinate a “great national effort” in the wake of the Brexit vote.
The Chancellor tweeted earlier this morning:
Meeting major banks in Downing Street shortly to discuss response to referendum result. We need great national effort to steer UK through
— George Osborne (@George_Osborne) July 5, 2016
The Chancellor warned prior to the referendum that a Brexit vote could tip Britain into recession and threatened £30 billion of tax hikes and spending cuts, a plan that has now been withdraw. Earlier this week Osborne told the Financial Times he still feared for a recession and set out his plans to keep Britain’s economy stable, which included cutting corporation tax to 15%.
Today’s talks with banks will likely focus on keeping banks lending despite the tough economic environment. The Chancellor referenced Tuesday’s financial stability report from the Bank of England, which included measures to free up £150 billion of capital to lend to households and businesses.
Banks will likely be reluctant to lend after their share prices took a battering in the wake of the shock Brexit — British exit from the European Union — win in the referendum last month. British banks saw share price falls of 20% or more and Royal Bank of Scotland and Barclays had to briefly halt trade.
The Bank of England warned earlier on Tuesday that: “The current outlook for UK financial stability is challenging,” adding that the EU referendum remains “the most significant near-term domestic risks to financial stability.” Like the Chancellor, the BoE has been holding high-level meetings with senior UK bankers.