Harsher stress tests described in new FSA risk outlook

The UK Financial Services Authority (FSA) has outlined a new, more severe stress scenario for banks in its latest Financial Risk Outlook, published on Wednesday.

The regulator noted that its 2009 stress scenario had more or less come to pass. GDP actually fell slightly more than in the scenario, though the economy also recovered slightly faster. This left the situation at the end of the year roughly in line with the stress scenario, which envisaged a peak-to-trough drop of 6.9%.

The new stress

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