On June 23, 2016, Britain held a referendum on leaving the European Union. The result supports brexit. Many economists worry about the economic impact of brexit. The pound fell to its lowest level against the dollar since 1985 as markets reacted to the referendum result. The drop stopped the bank of England announcing plans for an additional $250 billion to ensure a stable market share. Britain lost its triple-a credit rating, which will lead to higher borrowing costs for the government in the future.
To boost the economy and confidence, the bank of England announced the following measures:
Cut the benchmark interest rate to 0.25 percent from 0.5 percent earlier. It was the lowest rate since 2009 and the first cut.
The 100 billion plan forces Banks to increase interest rates by nearly 0.25 percent through loans to businesses and households.
Buying back the combined $60 billion of U.K. government bonds and $10 billion of company bonds increased market liquidity and spending.