Non-technical overview
Conditions remain challenging. Global and geopolitical risks are high and have continued to increase.
The economic outlook for the UK has improved somewhat since our Financial Stability Report in December. But some risks to the stability of the UK financial system have increased. And parts of the global financial system remain vulnerable to stress.
Some risks to UK financial stability are global. They include geopolitical risks such as the conflicts in Ukraine and the Middle East.
Households, businesses and financial institutions overseas continue to adjust to higher interest rates, which mean high debt payments and downward pressure on property prices. In particular, the prices of houses and commercial property (such as offices and retail premises) are falling in many countries, including in mainland China, where the property sector has been under stress for some time already. Our stress tests have shown that UK banks are strong enough to withstand any direct impact. But it could hit investor confidence more generally if it has a big impact on overseas banks, for example.
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