UK FPC Statement

The conflict in the Middle East has resulted in a substantial negative supply shock to the global economy. This has triggered significant market reactions, including large and volatile upward moves in global energy prices and government bond yields. The financial system has been resilient so far. However, the shock will weigh on growth, increase inflation and tighten financial conditions. This is likely to interact with vulnerabilities previously identified by the FPC in sovereign debt markets, risky asset valuations and risky credit ...

1: The Financial Policy Committee (FPC) seeks to ensure the UK financial system is prepared for, and resilient to, the wide range of risks it could face, so that it is able to absorb rather than amplify shocks, and serve UK households and businesses, thus supporting stability and long-term growth in the UK economy. 2: The Committee met on 25 November 2025 to agree its view on the outlook for UK financial stability. The FPC discussed the risks faced by the UK financial system and assessed the resilience of the system to those risks. ...

Risks associated with geopolitical tensions, global fragmentation of trade and financial markets, and pressures on sovereign debt markets remain elevated. The risk of a sharp market correction has increased. A crystallisation of such global risks could have a material impact on the UK as an open economy and global financial centre. Despite persistent material uncertainty around the global macroeconomic outlook, risky asset valuations have increased and credit spreads have compressed. Measures of risk premia across many risky asset ...

Risks and uncertainty associated with geopolitical tensions, global fragmentation of trade and financial markets, and pressures on sovereign debt markets are still elevated. Some geopolitical risks have crystalised. Related to this, material uncertainty around the global macroeconomic outlook persists. As an open economy with a large financial sector, these risks are particularly relevant to UK financial stability. In early April, US announcements on trade policy and subsequent responses from other jurisdictions were followed by ...

The global risk environment has deteriorated, and uncertainty has intensified. A range of risky asset prices, led by those denominated in US dollars, have declined sharply. The probability of adverse events, and the potential severity of their impact, has risen. Several risks associated with the fragmentation of global trade in goods, and financial markets, have intensified. A major shift in the nature and predictability of global trading arrangements could harm financial stability by depressing growth. A further risk is a reduction ...

Global risks associated with geopolitical tensions, global fragmentation and pressures on sovereign debt levels remain material. Uncertainty around, and risks to, the outlook have increased. As the UK is an open economy with a large financial sector, these risks are particularly relevant to UK financial stability. Valuations across several asset classes have risen further, leaving risk premia even closer to historical lows despite the challenges facing the global risk environment. Vulnerabilities in market-based finance could amplify ...

Risks to UK financial stability are broadly unchanged since the June 2024 Financial Stability Report (FSR). Significant financial market and global vulnerabilities remain. There was a significant spike in volatility across global financial markets in August. Although short-lived, the extent of the moves, in response to relatively limited economic news, illustrates the potential for vulnerabilities in market-based finance to amplify shocks. But while there was evidence that investor deleveraging had amplified price moves, it did not ...

The Financial Policy Committee (FPC) seeks to ensure the UK financial system is prepared for, and resilient to, the wide range of risks it could face – so that the system is able to absorb rather than amplify shocks and serve UK households and businesses. The overall risk environment The overall risk environment remains broadly unchanged from Q1. Markets continue to price mostly for a benign central case outlook, and some risk premia have tightened even further, despite the global risk environment facing several challenges. Some of ...