New financial crisis in offing

Speaking in Almedalen on Thursday, Martin Flodén, deputy governor of Sweden’s Riksbank, said he was worried about the European banking system, and that many European banks were only just keeping their heads above water, burdened by toxic loans. “The risk is that Britain’s decision to leave the EU will be the straw that breaks the camel’s back,” he said, expressing concern that Europe could be on the brink of a new financial crisis.

Mr Flodén said the Riksbank could provide liquidity in the event of a crisis, but admitted that monetary policy was already expansive, and interest rates could not be cut much further.