British stocks are plunging headlong into their biggest crash since the 2008 global financial crisis after the country voted to leave the European Union.
London FTSE 100 index is down more than 8%, the biggest fall since 2008. The pound has dropped to its lowest level in more than 30 years. Other European markets are also plunging.
The U.K. has become the first country to leave the European Union. Prime Minister David Cameron has resigned, saying he will stay in the office for the next three months.
“The financial markets have certainly taken the view that the decision to leave the European Union is bad news for the United Kingdom in the near term at least,” said Howard Archer, chief economist at IHS.
Banking stocks are the biggest losers. Barclays is down 30% in London, Deutsche Bank 16%, Lloyds Bank 28% and RBS 34%.
“We expect the hardest hit stocks to be financial (banks, insurance) followed by house builders, with commodities-related names (miners, oil) following close behind,” said Mike van Dulken, head of research at Accendo Markets.
As the market fell, the Bank of England said it will take all necessary steps to meet its responsibilities for monetary and financial stability.
“The Bank of England is monitoring developments closely. It has undertaken extensive contingency planning and is working closely with HM Treasury, other domestic authorities and overseas central banks,” it said in a statement.
London is the world’s leading financial center and the vote to leave the EU has triggered huge uncertainty about the future of its banking sector.
British banks whose stocks are traded elsewhere in the world have already seen big slumps.
Shares in HSBC crashed 11% in Hong Kong. Standard Chartered was down 12% and Prudential down 11%.
Unlike many major markets around the world, the London Stock Exchange doesn’t have mechanisms to halt trading in all stocks if there’s a crash.
But it can suspend trading in individual shares.