Britain’s biggest banks face even tougher stress tests

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Britain’s biggest banks will be stress tested against scenarios worse than the 2008 financial crisis

Britain’s biggest banks will be stress tested against scenarios more severe than the 2008 financial crisis.

The Bank of England will subject eight major banks to a what-if scenario – the worst case with inflation at 17% in 2023, GDP falling to 5% and unemployment at 8.5%.

The tests will assess the impact of a series of global shocks, starting in late June this year and spanning a five-year period.

Tests: Bank of England to subject eight major banks to a what-if scenario – worst case with inflation at 17% in 2023, GDP falling to 5% and unemployment at 8.5%

Banks will face interest rates reaching 6% in early 2023 before gradually reducing them to below 3.5%.

He also imagines a real estate crash where house prices fall by about a third.

The aim is to establish that major lenders can “absorb rather than amplify” economic shocks, the bank said.

He stressed that the doomsday numbers used for testing are not a prediction.

The test was last carried out in 2019. The eight test takers are Barclays, HSBC, Lloyds, Nationwide, NatWest, Santander UK, Standard Chartered and Virgin Money UK – collectively accounting for around 75% of UK lending.

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