Bank of England warns that economic outlook has ‘deteriorated materially’

UK lenders will need to set aside more cash to absorb shocks in the markets from next year, the Bank of England said. Photograph: Antonio Olmos/The Observer

The outlook for the UK and global economy has “deteriorated materially” due to inflationary pressures largely stoked by Russia’s invasion of Ukraine, putting extra strain on British household and business finances, the Bank of England (BoE) has warned.

The worsening economic outlook has caused volatility in global markets in recent months with more turbulence likely, the Bank said in its quarterly health check on the UK’s financial system.