BoE Tests Banks Ability to Deal With Deep Recession

The Bank of England will subject the U.K.’s biggest lenders to a stress test featuring a deep economic slump and a sharp depreciation of the pound as the country prepares for the impact of withdrawal from the European Union.

While the BOE didn’t target Brexit by name in its 2017 health-check scenarios published on Monday, it said risks to financial stability will be influenced by the “orderliness” of that process. Separately, banks must submit their contingency plans to the BOE’s Financial Policy Committee for approval and oversight, as the regulator seeks to ensure the supply of credit won’t be disrupted even if firms lose untrammeled access to the single market.

U.K. output plunges 4.7 percent in the first year of the stress test’s adverse scenario that covers seven U.K. banks, including HSBC Holdings Plc and Barclays Plc. The regulator flagged “rapidly” rising household debt as a concern, and began an investigation into the quality of new consumer lending. It also asked banks to explain how they’ll have to alter their business plans if profitability doesn’t improve.


USD/CAD – Lack of Fundamentals Leave Canadian Dollar Unchanged

Trumps Road to 100 Days of Inaction Rattles Markets

Week Ahead Trump Administration Fails with Healthcare Bill

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 Visit to find out more about the beat of the global markets. © 2023 OANDA Business Information & Services Inc.

Craig Erlam

Craig Erlam

Senior Market Analyst, UK & EMEA at OANDA
Based in London, Craig Erlam joined OANDA in 2015 as a market analyst. With many years of experience as a financial market analyst and trader, he focuses on both fundamental and technical analysis while producing macroeconomic commentary. His views have been published in the Financial Times, Reuters, The Telegraph and the International Business Times, and he also appears as a regular guest commentator on the BBC, Bloomberg TV, FOX Business and SKY News. Craig holds a full membership to the Society of Technical Analysts and is recognised as a Certified Financial Technician by the International Federation of Technical Analysts.
Craig Erlam