The Bank of England Financial Policy Committee (FPC) has issued its formal response (dated 19 December) addressing HM Treasury's November remit and recommendations for 2025/26. The FPC welcomes the recommendations made, confirming alignment with the government's aim of supporting sustainable economic growth while ensuring financial stability. It reflects on its recent work and refers to its assessment in the December Financial Stability Report (FSR) on the resilience of the UK financial system. It states that global macroeconomic and geopolitical risks continue to pose vulnerabilities, though, UK banks remain well capitalised, and results from the 2025 Bank Capital Stress Test show that the banking system could continue to support the economy even if conditions were materially worse than expected.
The FPC also reports progress on its medium term priorities including operational resilience, climate related financial risks and cryptoassets, noting that it remains alert to new and emerging risks which will remain a focus in the upcoming years. It also welcomes plans for a system wide exploratory scenario exercise on private markets, expected to be completed by the end of the year. As requested by HMT, the FPC also provides an update on areas where there is potential to increase the financial sector's ability to support sustainable economic growth, with conclusions set out in the FSR.
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