Experts warned of more carnage to come with fear gripping world markets seeing Japan briefly shut down and European stock markets all in free fall.
Britain also looked set to lose its triple-A rating after 52 per cent of Brits voted to Leave the EU yesterday.
Some FTSE 100 shares lost a third of their value, with supermarket chain Morrisons, easyJet and housebuliders Taylor Wimpey all hit hard as trading kicked off.
The 7.19 per cent fall was the third worst in history, behind the 2008 crash and 1987 Black Monday when the FTSE 100 fell by 12.22 per cent.
One financial magazine claimed the fall meant France had overtaken Britain as the world’s fifth largest economy: The UK is no longer the world’s 5th largest economy. The £ has fallen so far that France has overtaken us.(The London Economic).
David Cameron, who resigned earlier this morning, is in crisis talks over how to handle the freefalling stock market.
Markets across Europe also felt the impact of Brexit with Italian and Spanish markets plunging more than 11 per cent, the French CAC tumbled by 8.5 per cent in early trading in Paris.
Germany’s DAX is close behind with an 8 per cent.
Bank of England Governor Mark Carney today promised £250billion liquidity to calm the markets saying a “period of uncertainty” was inevitable.
He said that “economic volatility can be expected” in the coming weeks and months.
Seeking to calm fears, he said: “We are well prepared for this. Her Majesty’s Treasury and the Bank of England have engaged in extensive contingency planning.”
He added that the Bank will “not hesitate to take action”.
Today the pound also plummeted to a 30-year low causing Japan to halt trading as panic spread to the world markets as Britain voted to Leave the UK.
Dennis de Jong, managing director of UFX.com, said: “This is simply unprecedented. The pound has fallen off a cliff and the FTSE is now following suit. Britain’s EU referendum has been a cloud hanging over the global economy for the past few months and that cloud has got very dark this morning.
“The markets despise uncertainty, yet that is exactly what they’re faced with this morning. The shockwaves are likely to reverberate for some time and the warning lights are flashing brighter now than ever.”
The plunge in the share index was the biggest one-day fall since the ones suffered on 9/11 or the crisis that followed the nationalisation of Bradford and Bingley in 2008.
In the early hours, the pound plummeted to its lowest level against the dollar since 2009 at $1.34 wiping around 10 per cent off the value of the currency after a rollercoaster night for sterling.
Shortly after the polls closed at 10pm last night sterling rocketed to $1.50 dollars – its highest performance of 2016 – with traders branding the scale of the daily move “unprecedented”.
This morning economists started issuing doomsday predictions for UK economic growth.
IHS Global Insight said it is “substantially cutting” cutting its GDP growth forecasts from 2 per cent to 1.5 per cent, and alarmingly from 2.4 per cent next year to 0.2 per cent.
In further worrying news for the UK economy, ratings agency Standard & Poor has threatened to downgrade Britain’s AAA credit rating.
Japanese markets closed after falling 1,000 points. They reopened after the automatic 10-minute shutdown, but
The Japanese trade minister said the country would be watching closely for the impacts of Brexit on the Japanese economy.
The Bank of England could be forced to unleash a string of emergency measures to calm the markets and prevent a major crash, with Governor Mark Carney set to make a statement later this morning.
In a statement this morning, the Bank of England said it was “monitoring developments closely”.
“It has undertaken extensive contingency planning and is working closely with HM Treasury, other domestic authorities and overseas central banks.
“The Bank of England will take all necessary steps to meet its responsibilities for monetary and financial stability.”
That could even see trading on the FTSE suspended in an extraordinary move.
As markets showed sign of panic, shadow chancellor John McDonnell said: “That is exactly the sort of shock we were expecting so I would expect the Bank of England to intervene in the morning.
By: The Sun