It is warned by the Bank of England that an outburst of personal debt may have devastating effect on British economy.
London (debt-consolidation-for-the-stressed) July 15, 2006: British economy can be severely damaged by any explosion in personal debt, warned by the Bank of England. Britain’s financial market may face disastrous result due to sudden economic downturn.
In the financial stability report, the bank acknowledges that the UK financial system is “remarkably resilient”. It, however, warned that “plausible but unlikely” events like bird flu epidemic or flare-up of personal debts could have damaging results.
The bank’s deputy governor, Sir John Gieve, told that the report demonstrated the resilience of their financial system, but it also identified some sources of vulnerability.
He also added that risk management in the financial sector had become much more sophisticated, but the pace of innovation and growth of financial markets were raising the bar.
It is also informed by him that they were working with FSA (Financial Service Authority), treasury, and authorities abroad to mitigate the risk.
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