Finance Firms Express Increased Concerns About Global Economy, BoE Survey Reveals

Concerns regarding the potential risks to the UK financial system from a global economic downturn have surged to their highest point since late 2019, according to a survey conducted by the Bank of England (BOE).

The BOE’s biannual systemic risk survey, which took place between July 23 and August 12 and involved 55 financial firms, asked participants to identify the five risks they believe could significantly impact the UK financial system if they were to occur.

One-third of those surveyed expressed concerns about the threats to the UK financial sector stemming from a global economic downturn, marking a 19 percentage point increase—the largest rise compared to the previous survey conducted in March.

While the BOE reported that overall risks to British financial stability remained stable compared to its last evaluation in June, it cautioned against finding solace in a swift rebound of asset prices following a decline in August.

The two most commonly identified risks to UK financial stability reflected trends observed in previous surveys. Approximately 93% of participants pointed to geopolitical risks, an increase of 8 percentage points from the last survey. Meanwhile, 80% of firms highlighted cyber attack risks, which rose by 10 percentage points.

Respondents shared a variety of concerns within these categories, including ongoing conflicts, global elections, and the potential ramifications of cyber attacks on the entire financial system, particularly on banking infrastructure.

Notably, the percentage of respondents indicating climate risk has decreased in recent surveys, now at 29%—a decline of seven percentage points from earlier findings, marking the lowest level since the second half of 2022.