UK economic outlook has deteriorated, Bank of England warns

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The Bank of England said that the outlook for the UK and the rest of the world has deteriorated.

The price of energy and fuel is increasing rapidly around the world.

The Bank said that UK banks are in a good position to weather a downturn.

Banks were told to keep more money in the rainy day fund.

The bank made comments in its report.

The International Monetary Fund and the Organisation for Economic Co-operation and Development say that Britain is more vulnerable to recession and high inflation than other Western countries.

The Bank said banks need to increase the amount of money they set aside to absorb shocks. In a year's time, banks will have to set aside 2% of their assets as a buffer, instead of the normal 1%.

Depending on how the global economy pans out, the financial policy committee could change the rate in either direction.

Energy, food and fuel prices have put a strain on households.

After the price cap was increased, domestic energy bills went up by over a thousand dollars.

It is thought that this could go up to around $2,800 in October, which could push inflation up to more than 10% later this year.

The Bank said that commodity price volatility following the Russian invasion of Ukraine has had implications for the financial system.

Some households can't pay their debts. Some 40% of the mortgages are set to be renewed this year or next, which could push up the costs for these households.

The Bank said that tighter financial conditions and reduced real incomes will affect debt affordability for households, businesses and governments in many countries.

The Bank said financial institutions were resistant to debt vulnerabilities among households.