Bank of England finds risk of crisis biggest since 2008

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Image caption The Bank of England carries out its Systemic Risk Survey twice a year

The risk of a financial crisis in the UK is at its greatest since the collapse of Lehman Brothers in 2008, according to a Bank of England Survey.

Its systemic risk survey of 68 firms showed that 54% of respondents thought the risk of a "high impact event" was high or very high.

It covers the second half of 2011.

High impact events include scenarios such as the break-up of the euro, a UK government debt default, or a financial institution failing.

The joint top risks to the financial system cited by respondents were sovereign risk and the risk of an economic downturn, both of which were cited by 76% of them.

"The specific concerns cited in the sovereign risk category related mainly to the euro area or countries in the euro area," the report said.

"As for particular euro-area risks, responses included for example a break-up or collapse of the euro, disorderly debt restructuring, sovereign default and contagion."

The survey also found that confidence in the financial stability of the UK for the next three years had dropped to its lowest since the second half of 2009.

The survey is part of the Bank of England's attempts since the financial crisis to spot financial risks earlier.

The research was carried out in the month leading to 21 October and so excludes much of the recent pressure on sovereign debt in countries such as Italy and Spain.

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