Financial Services Report United Kingdom 4th Quarter

The Economist Intelligence Unit, October 2012, Pages: 25

The UK was a notable casualty of the financial market turmoil of 2007-09, the fallout from which will continue to inhibit economic activity for many years to come. A rapid deterioration in global credit markets at the peak of the financial crisis exposed deep-seated vulnerabilities-such as highly leveraged balance-sheet expansion, fragile funding structures and rapid creation of high-risk, poor-quality assets-that had been allowed to develop unhindered by an ineffectual regulatory framework during a long and unsustainable credit boom.

Uncertainty and volatility will persist owing to economic weakness, excessive private-sector debt, banks' fragile balance sheets and tighter regulatory moves. Sovereign default within the euro zone will remain a significant external risk.

With credit markets still constrained and the previously large shadow banking system (financial institutions that operate just outside the limits of bank regulation) much diminished, the financial system will remain backstopped by a range of explicit and implicit state guarantees. Official support has subsidised a return to bank profitability and financial sector bonuses in recent years, but underlying weaknesses will persist, given banks' refinancing needs, damaged balance sheets and counterparty risk arising from the interconnectivity of the undercapitalised European banking system and the threat of a euro zone break-up.

Industry List: Asset managers, Financial Services, Banks, Financial Services, Financial Services, Financial Services, Insurers
Industry Codes (NAIC): 52
Industry Codes (SIC): 60

Financial Services Report United Kingdom 4th Quarter

Market data: Financial services at a glance

Market data: Market opportunities

Market data: Key indicators

Financial services report
Overview

Banks

Insurers

Asset managers

Financial markets and instruments

Financial regulation
Overview
Regulatory watchlist

Monetary and currency policy: Monetary policy

Monetary and currency policy: Exchange rates

United Kingdom at a glance
Political structure
Sovereign debt ratings*

Fundamental indicators

Key contacts

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