LONDON (MNI) – Confidence in the UK’s financial stability has
fallen sharply in second half of this year, according to the Bank of
England’s latest biannual Systemic Risk Survey for H2 2011.
The BOE said that market participants’ confidence in the stability
of the UK financial system as a whole over the next three years fell to
its lowest level since 2009 H2, with 28% not very confident and 57% only
fairly confident, the BOE reported.
Asked to list key risks to the UK financial system, respondents put
sovereign risk top.
– Sovereign risk (76% of respondents)
– Risk of an economic downturn (76%)
– Funding risk (57%).
– Risks around regulation/taxes (38%)
– Risk of financial institution failure/distress (26%)
The probability of a future high-impact event in the UK financial
system rose sharply in H2, compared with H1 to the highest level since
the survey began in July 2008.
As for particular euro-area risks, responses included a
break-up or collapse of the euro, disorderly debt restructuring,
sovereign default and contagion.
For the UK, examples included a rating downgrade, loss of
confidence in fiscal solvency or the gilt market, a debt crisis, and
government default.
–London newsroom: 4420786274921624; email: dthomas@marketnews.com
[TOPICS: M$B$$$,M$$BE$,MABPR$,MT$$$$]