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"Confidence shocks could reduce external capital flows into the UK, which could adversely affect growth," the IMF said.
Notwithstanding a flexible exchange rate and independent monetary policy, confidence shocks could reduce external capital flows into the UK, which could adversely affect growth," it said.
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They now promise measures to create a beneficial "confidence shock".
"I now fear systemic economic failure — unless there is a positive confidence shock," said Timothy Ash, London-based head of emerging markets research at Standard Bank.
"What do you do when there is a confidence shock to your flight-to-safety asset?"But it is difficult to identify any such concerns today.
"The confidence shock will therefore continue to hinder investment and hiring decisions," Mathilde Lemoine, an economist at HSBC, said in a note.
The main issues facing the UK economy were the impact of rising prices on real incomes, "the confidence shock" from the eurozone, and a greater impact from the financial crisis on output than previously thought.
We believe it is too early for the Bank to have any meaningful data on how the economy and financial conditions are being affected by the confidence shock ensuing from the EU referendum outcome, and therefore too early to calibrate the appropriate policy response.
Not only does a fall in nominal incomes make it harder to service debt, but consumers (or businesses) may have taken on debt in the boom years on the assumption their nominal incomes would rise rapidly; the slowdown is thus a confidence shock.Writing about this phenomenon in our debt survey of 2010, I argued that the likely outcomes would be that economies would inflate, stagnate or default.
"I had a confidence shock.
The adoption of these three rules would generate a significant confidence shock in Barbados.
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