Bank of England Financial Policy Committee says UK Banks more stable but serious risk of future financial turbulence
The latest report from the Bank of England’s financial policy committee www.bankofengland.co.uk/publications/Pages/fsr/2017/jun.aspx shows that UK banks have increased their average capital adequacy ratio to 14% compared with just 3% to 4% before the 2008 meltdown. This increase in capital would enable them to weather a future financial downturn whilst maintaining active credit provision thereby avoiding the stultifying effect on the economy of a financial squeeze.
This may well turn out to be necessary. Other financial indicators are not so good. Globally there are serious issues. China has a debt to GDP ratio of 2.5 which is unlikely to end happily. And the Eurozone’s problems, particularly in Italy and Greece, are far from over.
Even more serious are the various possible outcomes for the UK of Brexit. Now that the effects of the UK’s decision to leave are beginning to filter through, the future seems uncertain. Apart from the likely damage to the City, the UK’s principal wealth creator, from a transfer of large amounts of Eurotrading to Germany, and possibly the Republic of Ireland, there is the possible macro effect on sterling. Were the currency to plummet in value – bearing in mind it has fallen 10% already whilst we still benefit from membership of the EU – this could trigger a huge hike in inflation with the consequent effect of interest rates and the economy generally.
There are two schools of thought as to the effect of difficult times on the legal market. One is that the consequent squeezing on businesses leads them to be more litigious to extract every penny they can from problematic transactions and contracts. The other is that a prosperous economy enables commercial lawyers to do what they can do best – help oil the wheels of business by advising on sound courses of action in settling difficulties and disputes and providing experienced advice on maximising the benefit of a commercial deal by optimising the legal structure in which it is framed.
In reality commercial barristers can provide constructive assistance in either scenario. At Cerulean Chambers our aim is to look after our clients in good times and bad. As commercial lawyers we believe that the timely seeking and following of good legal advice can avoid many pitfalls that trip up even well run businesses. If a dispute cannot be avoided we strive to assist our clients to achieve the least costly and best possible outcome for them, by negotiation rather than litigation wherever possible. If a dispute cannot be settled then our commercial lawyers have a formidable reputation for tenaciously prosecuting their clients’ interests in the highest levels of litigation.
We, at Cerulean Chambers, have unparalleled experience in providing our services as commercial barristers direct to our corporate and individual clients.
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