(11 July 2022 – United Kingdom) The Bank of England (BoE) warned that the economic outlook for the United Kingdom (UK) and the globe has become shrouded so Banks must ramp up capital buffers to ensure they can weather the storm.
The IMF and OECD assert that Britain is more susceptible to recession and stubbornly high inflation than other G7 countries similarly struggling with global energy and commodity market volatility driven by Russia’s invasion of Ukraine.
British banks are generally well positioned to withstand a severe economic downturn however relatively strong capital ratios will take a hit through to early 2023.
“The economic outlook for the UK and globally has deteriorated materially. Amid high volatility, liquidity conditions deteriorated even in usually highly liquid markets such as US Treasuries, gilts and interest rate futures. Developments around the war in Ukraine will be a key factor.” the BoE stated in its latest Financial Stability Report, adding that