More than three quarters of EU foreign exchange and over-the-counter interest rate derivatives trading takes place in Britain Stefan Rousseau/PABritain will face higher interest rates and escalating inflation if foreign investors desert the country over fears about the economy’s long-term potential after Brexit, the Bank of England has warned. The referendum may still take a damaging toll on prospects if overseas investors give up on the country or decide to move their money somewhere more stable, the Bank said in its Financial Stability Report. A sharp outflow of foreign capital “would be associated with higher funding costs for real borrowers and a further depreciation in sterling”. The pound has already fallen 16 per cent against the dollar since the June 23 vote. Higher inflation will leave households with less in their pockets as the cost of living rises.

Source: The Times November 30, 2016 09:53 UTC