Don't be fooled - Brexit shock is on the way, Bank of England's Shafik warns

The UK is in the grip of a “sizeable economic shock” after the Brexit vote, outgoing Bank of England Deputy Governor Minouche Shafik said today.

Despite better-than-expected data so far since the referendum, she said more stimulus was likely to be needed to “help ensure a slowdown in economic activity doesn’t turn into something more pernicious”.

The Bank has been accused of jumping the gun by some critics after cutting rates to 0.25% in August, expanding money-printing to £435 billion and buying up £10 billion in corporate debt.

But Shafik — who joins the London School of Economics next year — said it was “vital that monetary policy is set in a forward-looking manner”.

She added: “There is no doubt in my mind that the UK is experiencing a sizeable economic shock. Any reduction in openness or need to reallocate resources will necessarily imply a slower rate of potential growth for the economy.

"Moreover, the protracted process of leaving the EU means we still know very little about the nature of our future trading arrangements, and this uncertainty is weighing on prospects for business investment.”