UK financial system seen as resilient to Brexit, trade wars

London: Britain’s financial sector can withstand large shocks and disruptions, whether from a disorderly Brexit or a deterioration in global trade wars, the Bank of England said Monday.

In a set of reports and surveys, the central bank said it found that the country’s banks are strong enough to withstand a deep, global recession and market turmoil.

The core of the U.K. financial system including banks, dealers and insurance companies is resilient to, and prepared for, the wide range of U.K. economic and financial shocks that could be associated with a worst-case disorderly Brexit, said the authors of the bank’s Financial Stability Report.

Last week’s general election, in which Prime Minister Boris Johnson and his Conservative Party won a majority, means Brexit is almost certain to go ahead. Johnson has agreed with the EU on a withdrawal deal, with an exit expected by Jan 31.

But the ultimate nature of Britain’s relations with the European Union and major trading partners has yet to be agreed on, meaning there is still a risk of a disorderly exit.

Meanwhile, other major risks continue to linger, like the tariffs disputes that the United States has been waging against top trading partners.

In a biannual survey of investors’ views of risks, the Bank of England found that confidence in the stability of the financial system remains stable. But they found that politics – like the impasse over Brexit that has market Britain this year – was considered the top risk, along with cyberattacks and geopolitical events, like the trade war or conflicts around the world.

The surveys and reports were carried out before last Thursday’s election.