UK toughens stress tests with sterling drop, wider bond spreads

LONDON, March 27 (IFR) – Global GDP will fall by 2.4%, sterling plunges against the dollar, UK interest rates rise to 4% and US corporate bond spreads will widen by 1,150bp under the 2017 “stress test” scenario for Britain’s big banks.

The Bank of England set out stress test scenarios on Monday for this year’s health check of seven bank and building societies. The annual test is aimed at making sure they are resilient enough to withstand a deep global and UK recession and severe stress in financial markets.

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