Bank of England financial stability report: risks to the UK financial system are broadly unchanged since Q1

The prices of many assets such as shares and bonds remain high relative to historical norms, and some have continued to rise

Investors pay less attention to risks such as geopolitical developments or continued high inflation, which might cause weaker growth or interest rates to stay higher than expected

These risks make it more likely that there could be a sharp correction in asset prices

The global economy is facing several challenges, including the continued adjustment to higher interest rates, and higher debt payments for businesses and households.

Geopolitical risks remain high and there is policy uncertainty associated with elections set to take place globally. This could make the global economic outlook less certain and lead to financial market volatility.

Overall, UK households and businesses have remained resilient to the impact of higher interest rates.

The share of households spending a high proportion of their income on mortgage payments is still expected to increase slightly over the next two years. But the overall share of households who are behind in paying their mortgages remains low by historical standards.

Most UK businesses are likely to continue to be resilient to the economic outlook, including high interest rates. However some firms are likely to struggle with higher borrowing costs in the coming years.

UK banks are strong enough to support households and businesses, even if economic and financial conditions were to be worse than expected