The Bank of England has issued a new warning that Britain still faces a “challenging period” for financial stability despite resilience seen after the European Union referendum, and rules for banks must remain tight. Julian Satterthwaite reports.
BoE warns of ‘challenging period’
The UK may have weathered the initial Brexit storm, but the outlook is still cloudy.
That’s the verdict of the Bank of England at least.
Its Financial Policy Committee setting out its latest assessment Thursday.
(SOUNDBITE) (English) DAVID MILLIKEN, UK ECONOMICS CORRESPONDENT, SAYING:
“It’s concerned about what might happen in terms of the broader economic outlook, with the economy likely to slow and unemployment likely to rise and wage growth slowing. It’s concerned about whether people will be able to keep repaying loans and it’s also concerned about whether overseas investors might prove less willing to fund Britain’s current account deficit.”
The FPC’s job is to head off risks to the country’s huge financial services sector.
Britain’s big banks were hoping it might now lift a regulatory crackdown and make it easier for them to lend.
With Brexit looming, they want help to make sure London keeps its leading role in global finance.
But the FPC says this is no time to remove the shackles:
(SOUNDBITE) (English) CHIEF ECONOMIC ADVISER, CEBR, VICKY PRYCE, SAYING:
“So many firms are right now considering what they will be doing in the future and remember there are thousands, thousands, of European firms here which rely on the passporting arrangement for providing their services and that’s a serious, serious issue.”
The Bank of England expects growth to more than halve next year.
That would be certain to hit banks, with any slowdown making people and businesses less likely to borrow.
As with so much else in the UK, a lot hangs on exactly how Brexit pans out.