Bank of England: British banks resist a possible financial crisis

The Bank of England (BoE) stated that British banks are resilient to possible crises.

The BoE has published the results of its stress test on the British banking system.

In the statement, it was noted that 8 of the largest banks in the country are resistant to a possible crisis scenario based on high inflation, recession and low housing prices.

In the statement, it was claimed that UK banks have managed to withstand the rapid rise in the policy interest rate so far, and it was stated that citizens may find it difficult to pay off their loan debts in the face of rising policy interest.

‘BANKS RESISTANT TO SERIOUS STRESS’

“UK banks are resilient to a severe stress scenario including continued higher inflation, rising global interest rates, significantly higher unemployment in the UK and global economies, simultaneous deep recessions and sharp declines in prices of assets,” the statement said.

In the statement, which affirms that the quality of the assets of the British banks has improved since the last cyclical stress test carried out in 2019, in the possible crisis scenario, inflation in the United Kingdom will be around 11 percent on average during the next 3 years, then it will reach a peak of 17 percent, and real household income will reach the level of 11 percent. It was noted that a decrease of 13 is expected.

In the statement, it was indicated that the policy rate was at the 6 percent level, the economy contracted by 5 percent, unemployment more than doubled to reach 8.5 percent and housing prices decreased by 31 percent. (AA)