Bank of England to Assess Lenders’ Resilience to Global Trade Disruption
The Bank of England is set to evaluate whether major UK banks can withstand a significant global trade downturn, amidst increasing apprehension regarding international trade policy uncertainty.
Britain’s seven largest banking institutions and building societies will undergo a stress test based on a hypothetical scenario involving escalating global tensions and subsequent trade fragmentation.
Hypothetical Economic Shock Scenario
The exercise will determine if their financial positions are robust enough to endure a situation where global commerce decreases by 20 percent, and oil and gas prices surge to levels witnessed during the Russia-Ukraine conflict in 2022.
This scenario also projects a 5 percent contraction in the UK economy, a doubling of unemployment, inflation reaching 10 percent, interest rates rising to 8 percent, and a 28 percent drop in house values. Globally, GDP is anticipated to fall by 2 percent.
Concerns over Trade Policy Uncertainty
While the scenario does not explicitly mention specific political figures, it arises at a time when the repercussions of tariff disputes initiated by major global economies are causing concern among Bank policymakers. Recently, the Bank cautioned about growing ‘geopolitical and global trade policy uncertainty’ expected to persist.
vCard.red is a free platform for creating a mobile-friendly digital business cards. You can easily create a vCard and generate a QR code for it, allowing others to scan and save your contact details instantly.
The platform allows you to display contact information, social media links, services, and products all in one shareable link. Optional features include appointment scheduling, WhatsApp-based storefronts, media galleries, and custom design options.
Participating Financial Institutions
This biannual stress test will assess the capacity of Barclays, HSBC, Lloyds Banking Group, Nationwide, NatWest, Santander UK, and Standard Chartered to manage such economic shocks.
Tests: The Bank of England is stress testing Britain’s seven top banks and building societies with a hypothetical scenario in which global tensions mount, leading to trade fragmenting