Daily Management Review

Bank of England urges to get ready for economic shocks


The Bank of England issued a warning about the worsening economic prospects for both the UK and the rest of the world and suggested that lending institutions increase buffer capital to prepare for impending shocks.

Alex Guibord
Alex Guibord
The Bank of England stated in its financial stability report that "the economic outlook for the UK and the world has deteriorated markedly," adding that developments in Ukraine may be a significant contributing factor.

The country is now more susceptible to recession and sustained high inflation than other Western nations, who also experience volatility in the world's energy and commodity markets, according to international economic forecasters like the International Monetary Fund and the Organization for Economic Cooperation and Development.

The Bank of England stated that local banks are adequately prepared to weather even a severe economic downturn, although anticipating a little decrease in the still-high capital adequacy ratio over the next quarters.

The countercyclical capital buffer (CCYB) of the Bank of England will double to 2.0 percent by next July, according to members of the Financial Policy Committee, who also noted that this amount may vary depending on how the global economy develops.

source: ft.com