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14m ago
11.21 BST
The Bank
of England’s assessment of global financial risks is dominated by Donald
Trump’s tariffs. It reads as a litany of warnings about increased risks to
economic and financial stability.
The UK is
particularly at risk from global instability because it is a small, open
economy, the Bank said.
However,
the British banking system is “well capitalised” to withstand any turmoil, the
Bank said.
Here are
some more choice excerpts:
“The
global risk environment has deteriorated, and uncertainty has intensified. A
range of risky asset prices, led by those denominated in US dollars, have
declined sharply. The probability of adverse events, and the potential severity
of their impact, has risen.”
Several
risks associated with the fragmentation of global trade in goods, and financial
markets, have intensified” but a “major shift in the nature and predictability
of global trading arrangements could harm financial stability by depressing
growth”.
“Geopolitical
tensions, and risks associated with sovereign debt pressures globally, had also
risen.”
51m ago
10.44 BST
Bank of
England warns Trump tariffs raise risks of lower growth, higher inflation,
financial instability
The Bank
of England has warned that Donald Trump’s tariffs will raise risks to global
growth and higher inflation.
In the
record of the last meeting of its financial policy committee, led by governor
Andrew Bailey, the Bank said that there was also a risk that the tariffs could
worsen financial market shocks.
On the
direct impacts of Trump’s tariffs, the Bank said:
This
had contributed to a material increase in the risks to global growth and a
weakening of the central outlook, as well as increased uncertainty over the
outlook for inflation globally.
But
the committee, which is set up to look for risk to financial market stability,
also highlighted that risks have increased. It said:
Heightened
global uncertainty and perceived higher economic risk could translate into
tightened financing conditions for business, as well as impacting exit
opportunities for investors in an already subdued IPO market. Such developments
had the potential to interact with the vulnerabilities identified by the FPC
around high leverage, valuations uncertainty, credit market interconnections
and the exposure of insurers. In addition, these vulnerabilities could amplify
shocks to highly indebted UK corporates or investor confidence and potentially
affect UK financial stability.
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