10 July 2025 | Other

Bank of England warns that global tensions continue to threaten financial market stability

Bank of England warns that global tensions continue to threaten financial market stability

Despite easing tensions after the US paused planned import tariffs, financial markets remain in a high-risk zone, according to the Bank of England’s half-yearly report.

In its official release, the UK regulator underscored the threats stemming from geopolitical instability, increasing fractures in global markets, and growing stress on sovereign debt. The Bank of England’s Financial Policy Committee warned of a heightened likelihood of sharp sell-offs in risk assets and prolonged breakdown in historical correlations.

The UK’s rising national debt continues to worry investors, Reuters reports. British bonds recently took a hit after the government scrapped plans to cut welfare spending in the face of parliamentary opposition, while the future of Finance Minister Rachel Reeves has come under scrutiny.

According to Britain's Office for Budget Responsibility, the country's fiscal system remains in a relatively vulnerable position. To strengthen financial market resilience, the regulator plans to disclose more data on aggregate positions. This will enable investors to hedge risks more effectively.

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