Risks to the stability of the world’s financial system have increased as US tariffs could weigh on global economic growth, the Bank of England has warned.
Households and businesses nonetheless remain resilient and the UK banking system is equipped to support them even through a period of stress, the Bank’s Financial Policy Committee (FPC) said in its latest report.
“The global risk environment has deteriorated and uncertainty has intensified,” the FPC found.
“The probability of adverse events, and the potential severity of their impact, have risen.”
It follows US President Donald Trump announcing a series of new and higher tariffs on all imports to the US, resulting in retaliatory charges including by China.
The major shift in global trade arrangements could “harm financial stability by depressing growth” in the world’s economy, the Bank said.
These risks are “particularly relevant” to the UK because it is an open economy with a large financial sector.
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