British economic crisis not over

The rebound in Britain’s main stock market to where it was before the vote to leave the European Union does not mean all is now fine for the country’s economy.

The index is dominated by multinationals that do not reflect the national economy, which the Bank of England’s chief said Thursday would need more monetary stimulus after last week’s vote plunged Britain into an existential crisis and opened up new uncertainties for businesses.

The economic outlook has deteriorated and some monetary policy easing will likely be required over the summer.

[...] he stressed it was important for the government to have a plan in how to navigate the country through uncertainty — a thinly veiled dig at the disarray engulfing Britain’s main political parties.

Britain’s economy is facing a drop in investment among businesses as it remains unclear what trade relationship Britain will have with the rest of the EU.

The index, however, is a poor indicator for the British economy, experts say, because many of its listed companies are multinationals that do most of their business outside the country and benefit from the pound’s big slide since the vote, including an 11 percent drop against the dollar.

Oil companies BP and Royal Dutch Shell make their money in dollars, the currency in which crude is priced internationally.

The global presence that Britain’s biggest companies enjoy is expected to help them through the uncertainty, and will help the British economy to a certain degree.