All of the UK’s seven major banks have passed the Bank of England’s stress test for the first time ever, offering a positive outlook even in the event of a “no-deal” Brexit.
The results mean UK banks would be able to continue lending even if Britain were to “abruptly” leave the European Union in 2019, CBNC reports.
Speaking to reporters today, BoE governor Mark Carney said: “Let’s be clear, this is a big call … Because we will be here in March 2019 in the unlikely event that we end up in a situation without a transition deal or without an agreement. So we are putting our money where our mouth is.”
Subscribe to The Week
Escape your echo chamber. Get the facts behind the news, plus analysis from multiple perspectives.
Sign up for The Week's Free Newsletters
From our morning news briefing to a weekly Good News Newsletter, get the best of The Week delivered directly to your inbox.
From our morning news briefing to a weekly Good News Newsletter, get the best of The Week delivered directly to your inbox.
The test, first launched in 2014, is designed to ensure that banks are in possession of the right tools - such as sufficient liquidity and relatively strong capital positions - to weather an economic storm. The latest results show that all of the major UK banks are now in a position to “withstand a hard Brexit and still keep lending”, although Barclays and RBS did struggle, says The Times’s banking editor Katherine Griffiths.
The latter two only passed the hurdle rate set by the BoE because the regulator took account of efforts they had already made to increase their financial strength since the end of last year, when the tests were applied.
Brexit stress still lingers, however, Bloomberg says. The Bank told lenders to add an extra £6bn to their capital buffers, and may increase requirements again in 2018 over fears that the potential combination of a no-deal Brexit without a transition period, and a global recession, could “strangle the flow of credit to the economy”.
-
What to know before turning to AI for financial advicethe explainer It can help you crunch the numbers — but it might also pocket your data
-
Book reviews: 'The Headache: The Science of a Most Confounding Affliction—and a Search for Relief' and 'Tonight in Jungleland: The Making of Born to Run'Feature The search for a headache cure and revisiting Springsteen's 'Born to Run' album on its 50th anniversary
-
Keith McNally' 6 favorite books that have ambitious charactersFeature The London-born restaurateur recommends works by Leo Tolstoy, John le Carré, and more
-
Can the UK avoid the Trump tariff bombshell?Today's Big Question President says UK is 'way out of line' but it may still escape worst of US trade levies
-
Five years on, can Labour's reset fix Brexit?Today's Big Question Keir Starmer's revised deal could end up a 'messy' compromise that 'fails to satisfy anyone'
-
Why au pairs might become a thing of the pastUnder The Radar Brexit and wage ruling are threatening the 'mutually beneficial arrangement'
-
Brexit: where we are four years onThe Explainer Questions around immigration, trade and Northern Ireland remain as 'divisive as ever'
-
Will the UK economy bounce back in 2024?Today's Big Question Fears of recession follow warning that the West is 'sleepwalking into economic catastrophe'
-
Interest rates rise to 5.25% for first time in 15 yearsSpeed Read Inflation is slowing but at 7.9% it remains well above the Bank of England’s 2% target
-
Five options to get the UK back to 2% inflationfeature Some economists believe alternatives to raising interest rates are in the country’s best interests
-
Why aren’t soaring interest rates bringing down inflation?Today's Big Question PM pins blame for stubborn inflation on fixed-rate mortgages, but economists say the picture is more nuanced
