You are here: Home - Saving & Banking - News -

UK banks ready for no-deal Brexit but EU borrowers could suffer

Written by: Max Liu
Britain’s financial system is prepared for a no-deal Brexit but borrowers in European Union countries could face disruption, according to the Bank of England’s latest stress test.

The UK central bank’s test assessed the resilience of the country’s economy in a worst case scenario no-deal Brexit alongside global recession and a fall in worldwide GDP bigger than that seen during the financial crisis a decade ago.

The test found that, while Britain’s financial system had prepared for a no deal Brexit and ensured its borrowers will have access to European banks, governments on the other side of the English channel were under-prepared.

This means borrowers in EU countries could face higher costs and disruption if London and Brussels fail to reach a deal. They could be cut off from £20trn-worth of derivatives in the UK, affecting loans such as fixed-rate mortgages.

Cross-border disruption

The impact of any turmoil could come full circle, the bank said, as disruption in the EU may affect financial stability in the UK.

The Bank of England said: “Some disruption to cross-border services is possible and, in the absence of other actions by EU authorities, some potential risks to [UK] financial stability remain.”

The UK is set to leave the EU on 29 March. British MPs will vote on Theresa May’s Brexit withdrawal deal by 12 March and, if it is defeated, the prime minister has said they will have the chance to vote on ruling out a no-deal Brexit the following day.

There are 0 Comment(s)

If you wish to comment without signing in, click your cursor in the top box and tick the 'Sign in as a guest' box at the bottom.

The savings accounts paying the most interest

It’s time to get your finances in shape, and moving your cash savings to a higher paying deal is a good plac...

Everything you need to know about being furloughed

Few people had heard of ‘furlough’ before March 2020, but the coronavirus pandemic thrust the idea of bein...

The experts’ guide to sorting out your personal finances in 2021

From opting to ‘low spend’ months to imposing your own ‘cooling-off period’, industry experts reveal t...

What will happen if rates change

How your finances will be impacted by a rise in interest rates.

Regular Savings Calculator

Small regular contributions can build up nicely over time.

Online Savings Calculator

Work out how your online savings can build over time.

Having a baby and your finances: seven top tips

We’re guessing the Duchess of Cambridge won’t be fretting about maternity pay or whether she’ll still be...

Protecting family wealth: 10 tips for cutting inheritance tax

Inheritance tax - sometimes known as 'death tax' - can cause even more heartache for bereaved families. But th...

Travel insurance: Five tips to ensure a successful claim

Ahead of your summer holiday, it’s important to make sure you have the right level of travel cover or you co...

Money Tips of the Week