Bank of England warns on Brexit

Britain's EU referendum could push up credit costs and weaken sterling more, the Bank of England warned yesterday, as it moved to bolster banks' risk buffers and slow a boom in lending to landlords. The central bank said the outlook for financial stability had worsened since its last report in November, saying a rebound in Chinese lending was "concerning" and that June 23's vote on leaving the EU was now the biggest domestic risk. BoE governor Mark Carney came under fire from some pro-Brexit lawmakers earlier this month for exaggerating the dangers of leaving the EU. The BoE's Financial Policy Committee said yesterday that "heightened and prolonged uncertainty... could lead to a further depreciation of sterling and affect the cost… of financing for a broad range of UK borrowers." Sterling has fallen to a seven-year low against the dollar since the start of the year. While much of the BoE's concern about Brexit was familiar, less expected was its decision to tighten credit checks on landlords and move ahead with a disputed plan to vary the size of banks' risk buffers over the economic cycle. The immediate impact of both measures is likely to be modest, but they indicate a policy...

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