United Kingdom: Financial Sector Assessment Program – Financial System Stability Assessment
February 23, 2022
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The UK financial sector is generally systemic, open and complex. It has weathered the COVID-19 pandemic well, thanks to post-GFC reforms, a proactive macroprudential stance, and an effective multipronged response to maintain financial stability. Brexit uncertainties are being appropriately managed as UK and European authorities and the financial sector work together to avoid undesirable financial stability outcomes. The endpoint of the pandemic remains uncertain, as does the actual impact on the financial system once support measures weaken. At this stage, therefore, the conditions for financial stability in the UK are shaped by three key considerations: (i) the evolving relationship between the UK and the EU in financial services; (ii) ensure a sustainable and robust post-pandemic economic recovery; and (iii) successfully manage ongoing structural transitions.