The Bank of England warns of heightened financial risks from trade wars, geopolitical instability, and shadow banking vulnerabilities, posing challenges to the UK economy and financial system.

The Bank of England warned on Friday that higher trade barriers could hit global growth and feed uncertainty about inflation, potentially causing volatility in financial markets and pushing up borrowing costs for businesses and consumers.

More work is needed to tackle risks outside the banking sector, according to a Bank of England study which found that a market crisis would be amplified by fire sales of assets by pension funds, hedge funds and other investors.

Surging government debts threaten to hammer the British economy and drive up borrowing costs for households, businesses and the Treasury, the Bank of England has warned.

The Bank of England warns of potential financial stability risks from higher trade barriers, geopolitical tensions, and pressures on government debt levels.