UK Bank Stress Test Include Global Economic Slump

The UK banking industry will have to prove it can endure a global economic slump in this year’s Bank of England stress tests.

The Bank has set out the parameters of this year’s stress test, which include a collapse in economic growth in China and a sharp downturn in the eurozone.
The test imagines a sharp contraction in eurozone economic growth and Chinese expansion of just 1.7%.
China’s economy expanded by 7.4% in 2014 – the slowest pace for 24 years.

Economic growth of just 1.7% would plunge Hong Kong into a deep recession that would cause house prices on the island to collapse by 40%, hitting UK lenders such as HSBC.
Bank and building societies will also have to prove they have the capital resources to withstand a 2% fall in economic output in the eurozone.
In addition the stress tests imagine a scenario in which the UK economy contracts by 2.3%.

via BBC

Content is for general information purposes only. It is not investment advice or a solution to buy or sell securities. Opinions are the authors; not necessarily that of OANDA Business Information & Services, Inc. or any of its affiliates, subsidiaries, officers or directors. If you would like to reproduce or redistribute any of the content found on MarketPulse, an award winning forex, commodities and global indices analysis and news site service produced by OANDA Business Information & Services, Inc., please access the RSS feed or contact us at info@marketpulse.com. Visit https://www.marketpulse.com/ to find out more about the beat of the global markets. © 2023 OANDA Business Information & Services Inc.