BoE Governor Andrew Bailey warned that risks to the UK financial system have increased over the past year, even as markets remain relatively calm. Speaking to parliament’s Treasury Committee, he said the central bank’s December Financial Stability Report concluded that geopolitical developments were a key driver behind the rising risk assessment.
Bailey highlighted geopolitical tensions and trade disputes as particularly important considerations, noting that they can carry significant “financial stability consequences”. While he stopped short of pointing to any single trigger, he stressed that the scale and persistence of geopolitical uncertainty itself represents a material risk to the financial system.
He also cautioned against complacency. Bailey said markets and global growth have so far proved more resilient than expected in the face of repeated political shocks, including ongoing U.S. tariff threats. “Neither of them I take as a source of any assurance going forward,” he said, adding that policymakers must remain highly alert to the risks ahead.
