UK BANKS STRONG ENOUGH TO COPE, SAYS BOE?S FINANCIAL STABILITY REPORT

The Bank of England's (BoE) latest Financial Stability Report, published today, suggests that UK banks have built up a high level of capital that will allow them to support consumers and businesses through the Covid-19 pandemic and continue to lend (BBC, online only). It would allow banks to absorb ?very big losses? even in the event of unexpected economic outcomes (Financial Times, £, online only). While the majority of potential risks to the financial stability of the UK economy posed by a ?no-deal? Brexit have been mitigated, there remains a possibility of ?market volatility and disruption to financial services? (Telegraph, £, online only). The BoE's Financial Policy Committee (FPC) said banks should expect 'some headwinds? over the coming quarters (City A.M., online only).

PREPARE FOR A ?NO-DEAL? BREXIT, MINISTERS TOLD

Prime minister Boris Johnson has warned Britain to prepare for a ?no-deal? Brexit, with movement looking unlikely ahead of Sunday's deadline for EU-UK trade talks (Financial Times, £, p1). Following a 45-minute meeting with EU Commission president Ursula Von Der Leyen, accompanied by his chief negotiator, Lord Frost, Mr Johnson said that there was a 'strong possibility? of emerging with an option closer to the relationship Australia has with the EU, without a trade deal (The Times, £, p1). Mr Johnson said that the UK risked being ?locked in the EU's orbit? (Guardian, p1), and The Telegraph (£, p1) reports that the prime minister told cabinet members that Brussels is looking to "punish" Britain for refusing to be bound by EU rules. Meanwhile, a ?no-deal? Brexit together with the end of the stamp duty holiday could lead to a ?perfect storm for the housing market? in 2021 (The Times, £, B&M p6).

NEWS IN BRIEF

The EU has agreed a deal to cut carbon emissions by 55 per cent over the next decade (City A.M., online only).

Britain's economic recovery almost ground to a halt in October as a surge in coronavirus cases hammered the hospitality sector (Reuters, online only).

The Prudential Regulation Authority announced yesterday that lenders can now resume dividend payments after finding they were resilient to "a wide range of economic outcomes, including economic scenarios that are materially more severe than current central expectations" (Financial Times, £, p10).

According to forecasts from the Confederation of British Industry (CBI), Britain's economy will recover in 2021 but a fifth year of weak business investment will delay a full recovery until the end of 2022 (Guardian, online only).

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