Shares plunged and the pound plummeted to a 31-year low as panicked traders reacted to the UK’s vote to leave the EU and the prospect of recession amid months of market turmoil.
The FTSE 100 fell more than 8% within the first few minutes of trading on Friday, with shares in banks particularly hard hit and nursing their biggest falls since the collapse of the US investment bank Lehman Brothers in 2008.
At the opening bell on Wall Street, US shares were down sharply, with the Dow Jones industrial average shedding more than 500 points, down nearly 3%. There were even sharper falls on bourses in mainland Europe, where economists said Brexit would hurt an already fragile recovery.
After the heavy early losses, UK markets were calmed somewhat by David Cameron’s announcement that he would resign, and a pledge from the Bank of England that it would take any measures needed to stabilise markets and the economy. More assurances to step in where necessary followed from the US central bank, the International Monetary Fund and from finance ministers in the G7 group of big economies.
The Bank of England’s governor, Mark Carney, said:“Inevitably, there will be a period of uncertainty and adjustment following this result.”
“But we are well prepared for this,” he added in a televised statement. The Bank will not hesitate to take additional measures as required as markets adjust and the UK economy moves forward.”
The G7 finance ministers said they would consult closely on market moves and financial stability and cooperate as appropriate.
Those assurances calmed jittery markets somewhat and by afternoon trading, the FTSE 100 had erased some of its early losses. It was down 220 points, or 3.5%, on the day to 6,117, with shares in banks and housebuilders among the worst hit. That meant it was actually up for the week as whole.