"For the first time in a long time you don't have to be an optimist to see the glass is half full. The recovery has finally taken hold."
- Mark Carney, Bank of England Governor
Britain is balancing on the edge. This statement could be made after a half-yearly survey of financial institutions conducted by the central bank, which showed that even though confidence in the nation's financial system soared to the highest rate in more than five years, risks surrounding current government measures rose as well.
Figures from the BoE's System Risk Survey showed that 18% of voters are absolutely sure or very confident in the stability of the U.K. financial system as a whole during the next three years. Meanwhile, vast majority (78%) of respondents believe the financial sector is fairly confident, while only 4% expressed their concerns over stability of the sector. In comparison with the previous report, the number of pessimists decreased by 13%.
On the other hand, government measures are weighing on the economy and increasing risks for future development. For the second consecutive survey, the record-low interest rate environment advanced the sharpest in analysts' assessments of possible threats and risks for the economy, with 43% citing this factor. Moreover, respondents stressed out the risk that interest rates may inch higher to the historical levels too fast. Expectations over sooner-than-expected hike in interest rates have strengthened due to robust fundamental data from the U.K.
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