Bank of England calls for Article 50 stress tests
The Bank of England has warned British banks to prepare for a number of potential scenarios two days before Prime Minister Theresa May ignites Article 50.
The Bank of England says that lenders will have to provide copies of contingency plans to reassure regulators that they are ready for “a range of possible outcomes.”
The “outcomes” include a steep rise in inflation,unemployment and interest rates.
UK banks to face new stress tests https://t.co/xZFdrnQdT4 .— BirminghamLovesBiz (@B_hamLovesBiz) March 27, 2017
theresa_may</a> <a href="https://twitter.com/hashtag/Banking?src=hash">#Banking</a> <a href="https://twitter.com/bankofengland">bankofenglandpic.twitter.com/2Kshqcb4m3
The level of UK household debt is high and the central bank wants to know if lenders can cope with indebted customers losing their jobs.
The latest Bank of England 'stress test' looks like a world where Brexit has gone wrong https://t.co/NNXX6mYicSpic.twitter.com/cRCW6ZyFZu— BI UK Finance (@BIUK_Finance) March 27, 2017
The plot thickens for all as debt repayment goes through the roof because of interest rate rises and higher inflation as a result of new trade barriers.
There is evidence that consumers are already tightening the purse strings and preparing for the worst.