LONDON—Don’t be fooled: the rebound in Britain’s main stock market to where it was before the vote to leave the European Union does not mean all is now fine for the country’s economy.
The index is dominated by multinationals that do not reflect the national economy, which the Bank of England’s chief said Thursday would need more monetary stimulus after last week’s vote plunged Britain into an existential crisis and opened up new uncertainties for businesses.
“The bank has identified the clouds on the horizon,” Mark Carney said in a speech. “The economic outlook has deteriorated and some monetary policy easing will likely be required over the summer.”
That could mean a cut to interest rates or an injection of billions more into the financial system at the next meeting in two weeks.
He warned, however, that the central bank could not protect the country entirely from an economic shock. And he stressed it was important for the government to have a plan in how to navigate the country through uncertainty — a thinly veiled dig at the disarray engulfing Britain’s main political parties.
