Financial firms are more worried about the global economy, BoE survey by Reuters shows

LONDON (Reuters) – Concerns about risks to the U.K. financial system posed by a global economic downturn rose sharply to their highest level since the second half of 2019, a Bank of England (BOE) survey showed on Wednesday ).

The Bank’s twice-yearly systemic risk survey surveyed 55 financial firms between 23 July and 12 August and asked each participant to list the five risks they believed would have the greatest impact on the UK financial system if would materialize.

A third of respondents expressed concern about the threat to the UK financial sector associated with an overseas/global economic downturn, an increase of 19 percentage points and the biggest increase compared to the previous survey’s results in March, it said BoE.

The BoE said overall risks to British financial stability were unchanged from its last assessment in June, but that it would be wrong to get comfortable with a quick recovery in asset prices after a slump in August.

The two most frequently cited risks to the UK’s financial stability mirrored previous surveys. Some 93% of respondents cited geopolitical risk, up 8 percentage points from the previous BoE survey, while a cyber attack was cited by 80% of firms, up 10 percentage points.

Respondents reported a range of concerns within these two categories, including ongoing conflicts, global elections, and the potential for cyber attacks to affect the entire financial system, including banking system infrastructure.

The proportion of respondents citing climate risk has fallen in recent surveys to 29%, about seven percentage points lower than the previous survey and the lowest since the second half of 2022.