The Bank of England has issued a warning to companies that they must “prepare” for shocks in the globally financial markets.
The Bank said that over the summer there was a “spike in volatility” and despite this the British banking system stayed strong to counter a tougher economy.
In their latest report Bank’s Financial Policy Committee (FPC) they said since their last report in June UK financial stability remained unchanged.
But the bank warned on a global scale the outlook for the economy is elevated amid the geopolitical situation.
On Tuesday the Middle East witnessed a major escalation with Iran firing almost 200 ballistic missiles on Israel plus their operations in Lebanon and Vladimir Putin’s war in Ukraine.
The FPC said there has been a “short-lived spike in volatility and falls in equity indices across global financial markets in early August.”
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“Markets remain susceptible to a sharp correction, which could affect the cost and availability of credit to UK households and businesses, with investors sensitive to short-term developments in a challenging global risk environment,” the FPC report said.
