The U.K.'s stock markets, pound sterling and growth forecast continued to fall Monday following the outcome of a referendum deciding that the country should leave the European Union.
The FTSE 100 was down 2.6% for the day, while the FTSE 250 dropped 6.9%. The pound sterling dropped even further vs. the dollar from 30-year lows on June 24, falling to $1.32. The yield on 10-year gilts also fell below 1%.
Trading in a number of stocks was halted Monday as London Stock Exchange circuit breakers kicked in following moves in share prices of 8% from market opening. The up to five-minute halt to trading allows markets to find the new price of the stock. A spokesman for Royal Bank of Scotland Group confirmed trading was paused on three occasions Monday — twice as the price fell, and once as it moved up. RBS shares closed down about 15%. A spokesman for Barclays separately confirmed that trading was suspended around 9:30 a.m. BST, for two minutes, due to share price movements. Barclays closed down more than 17%.
Growth forecasts were slashed by a number of money managers in the few days following the U.K.'s shock 52% majority vote to leave the EU. David Page, senior economist at AXA Investment Managers, revised U.K. GDP forecast for 2017 to 0.4% from 1.9%.
Bank of America Merrill Lynch Global Research said in a report Monday that its economists had cut its U.K. GDP forecast to 1.4% in 2016 from 1.7%, and to 0.2% from 2.3% in 2017. BofA's economists expect the Bank of England to cut interest rates 50 basis points, to zero, and a further £50 billion ($68.3 billion) of quantitative easing.
The firm's economists also cut growth estimates for other regions, slicing U.S. GDP to 1.8% from 2% in 2017, and eurozone GDP to 1.1% from 1.6%.
Also Monday, George Osborne, chancellor of the exchequer, said in a speech that he wanted to “reassure the British people and the global community that Britain is ready to confront what the future holds for us from a position of strength.” He cited work to rebuild the British economy, robust growth, a record-high employment rate and improved capital requirements for banks as reasons for reassurance.
However, he warned that the days ahead “will not be plain sailing,” but that the U.K. people “should not underestimate our resolve.”
Following the resignation of Prime Minister David Cameron on June 24, who will leave by October, Lord Jonathan Hill, the U.K.'s EU commissioner for financial stability, financial service and capital markets union at the European Commission, resigned. Mr. Hill announced June 25 announced he would stand down following a handover period.
