The Bank of England has warned of increasing risks to the financial system due to ongoing market volatility and the Middle East conflict. The Bank’s Financial Policy Committee said the conflict was “likely to interact with vulnerabilities” in the UK economy, adding that while the financial system has been “resilient so far… the shock will weigh on growth, increase inflation and tighten financial conditions.” The Bank said that with the “global environment… materially more unpredictable as a result of the conflict,” this increases the likelihood of “large, frequent and potentially overlapping shocks, and episodes of intense market volatility.” Meanwhile, Prime Minister Sir Keir Starmer has acknowledged the economic turmoil, saying that he “had to level” with the British public that the impact “would not be easy.”
