Arab Press

بالشعب و للشعب
Saturday, Feb 22, 2025

UK central bank: financial sector ready for no-deal Brexit

UK central bank: financial sector ready for no-deal Brexit

The U.K. financial system is prepared to cope with a no-deal Brexit, though uncertainties about the country's withdrawal from the European Union are weighing hard on the wider economy, the Bank of England said Wednesday.

The bank's Financial Policy Committee, which assesses financial risks, said legislation, temporary permissions and other preparations by British authorities have been made to "ensure that households and businesses will be able to use existing and new services from EU financial institutions." The wider economy, however, is feeling the strain.

"Entrenched Brexit uncertainties, particularly in an environment of weaker global growth, continue to weigh on economic activity in the U.K.," it said. "Brexit uncertainty is weighing on business investment, the prices of U.K. assets and flows of foreign capital into the U.K."

It highlighted commercial property as one sector that's struggling as global investors become more cautious.

Britain is due to leave the EU on Oct. 31 and Prime Minister Boris Johnson has insisted the country will do so with or without a withdrawal agreement. With little sign of progress in the Brexit negotiations, there are fears that the country could end up leaving in a disorderly manner — a scenario that most economists think will cause damage to the British economy as tariffs and other impediments to trade with the EU are put up.

"Although actions by businesses and authorities have resulted in some improvement in the preparedness of the U.K. economy for a no-deal Brexit, material risks of economic disruption remain," the committee said.

Johnson has consistently said that Britain will leave on the scheduled Brexit date even though Parliament has backed a bill that compels him to seek an extension to the deadline if no deal is reached at next week's EU leaders' summit in Brussels.

Whatever happens at the end of the month, the bank's Financial Policy Committee said the "core of the U.K. financial system including banks, broker dealers and insurance companies is resilient to and prepared for the wide range of risks it could face, including a worst-case disorderly Brexit."

It said that even in the event of a deep recession that sees firms unable to repay loans or households falling behind on their mortgages, Britain's major banks have the capacity to absorb ensuing losses "and still have significantly more capital than in 2007."

As a result, the committee said it was maintaining its so-called countercyclical capital buffer rate -a kind of rainy day fund -at 1%.

It noted that financial stability is not the same as market stability and that significant volatility in some markets is to be expected in a disorderly Brexit. Demand for U.K. assets, including the pound, could be expected to "fall sharply."

The committee also warned Facebook that the cryptocurrency it plans to set up, Libra, will have to clear a series of hurdles if it's to be licensed in Britain.

Though it said Libra has "the potential to become a systemically important payment system," it stressed that "such a system would need to meet the highest standards of resilience and be subject to appropriate supervisory oversight, consistent with the principles set out above."

Newsletter

Related Articles

Arab Press
0:00
0:00
Close
The negotiation teams of Trump and Putin meet directly, establishing the groundwork for a significant advance.
Israeli Minister Urges Hamas to Surrender and Depart from Gaza.
Iran Considers Moving Its Capital Due to Urban Difficulties
Israel and Hamas Finalize Sixth Exchange of Hostages and Prisoners During Continuing Gaza Ceasefire
Leaders of BRICS to Gather in Rio de Janeiro for July Summit
Muhsin Hendricks, a trailblazing openly gay imam, was killed in South Africa.
Trump's special envoy for hostage affairs cautions Hamas against challenging Trump before Saturday's deadline.
Two British citizens apprehended in Iran amid escalating tensions.
Israel Issues Threat of Military Action as Hostage Negotiations with Hamas Continue
Hamas Coordinates Worldwide Solidarity Marches in Reaction to U.S. and Israeli Initiative
Israel Warns of Ending Gaza Ceasefire Due to Hostage Situation
King Abdullah II Dismisses US Proposal to Relocate Palestinians, Commits to Welcoming Gaza Children.
Lebanon Installs New Government with Hezbollah's Impact on Key Ministries
Report: Iran Attempted to Assassinate Trump During Election Campaign
U.S. Authorizes $7.4 Billion Arms Sale to Israel
Iran's Supreme Leader Rejects Nuclear Negotiations with the U.S.
UN Chief Denounces Trump's Gaza Plan, Cautions Against Ethnic Cleansing
Pressure Intensifies for a Free Trade Agreement between the UK and GCC in Light of Economic Difficulties
Israel to Withdraw from UN Human Rights Council Due to Accusations of Anti-Semitism
EU Reaffirms Gaza's Essential Role in Future Palestinian State Following Trump's Proposal
Iranian Currency Reaches All-Time Low Amid US 'Maximum Pressure' Initiative.
UN Reaffirms Ban on Deportation from Occupied Territories Amid US Gaza Proposal
Palestinians Fear Repeat of 'Nakba' Amid Ongoing Crisis in Gaza
UAE Aids in the Exchange of 300 Prisoners Between Russia and Ukraine
Egypt Seeks Global Backing for Two-State Solution Following US Proposal for Gaza Plan
Trump's Suggestion to 'Seize Control' of Gaza Represents a Significant Shift in US Policy
French President is the first EU leader to extend congratulations to the new Syrian President.
Tunisian President Appoints New Finance Minister Amid Economic Crisis
Trump Suggests U.S. 'Takeover' of Gaza, Prompting Global Worries
Trump's Proposal for Gaza Provokes Global Debate
President Trump Suggests Moving Gaza's Palestinian Population
Aga Khan IV, Spiritual Leader and Philanthropist, Dies at 88
Erdogan and Syria's Sharaa Talk About Collaboration to Counter Kurdish Militants
Trump Suggests U.S. Control of Gaza Strip Amid Ongoing Conflict
Trump Resumes 'Maximum Pressure' Strategy to Limit Iran's Oil Exports.
Ex-British Soldier Sentenced for Espionage on Behalf of Iran and Fleeing from Prison
Gazans in Egypt Reject Displacement, Struggle with Return to War-Torn Home
Queen Rania Urges Protection of Children’s Rights at Vatican Summit
Hamas Officials Ready to Begin Negotiations for Phase Two of Gaza Truce
Trump Expresses Caution Over Gaza Ceasefire as Netanyahu Visits Washington
Oman to Host 18th Indian Ocean Conference on Maritime Security and Trade
Emir of Kuwait Meets BlackRock CEO for Talks on Investment Opportunities
Queen Rania of Jordan Calls for Global Action on Children’s Rights at Vatican Summit
Egyptian President El-Sisi Invited for White House Meeting Following Jordanian King’s Visit
Queen Rania Calls for Protection of Children’s Rights at Vatican Summit
Israeli Military Operations Continue on Lebanon Border Amid Ceasefire Tensions
Israeli Hostage's Release Highlights Uncertainty Over Family's Fate
Israeli Military Operations Escalate in Southern Lebanon Amid Hezbollah Tensions
Zayed Award for Human Fraternity Announces 2025 Honorees
Kuwait Anticipates a 12% Increase in Budget Deficit for the 2025-2026 Fiscal Year
×