Ten years have passed since the financial crisis that shook the world. Mark Carney, the Governor of the Bank of England, has warned that there are still at least four major risks that remain, and the financial community should not become complacent.
The first risk he identified was the high levels of household debt, which a recent study found to be worse than any other period on record.
For the first time since the 1980s, the average British household has a financial deficit, spending roughly £900 more than they received during 2017.
As a result, the Bank of England has put in place harsher rules on lending, concerned that people will not be able to pay back loans.
The second risk Mr Carney raised was Brexit – hardly surprising.
As the March deadline looms, the potential of a “no deal” means that financial services face the prospect of massive disruption and major changes to how the system operates.
UK Finance recently warned that this scenario – where the UK crashes out of the EU with no deal – needed to be addressed as a matter of urgency “to avoid the risk of a serious breakdown in cross-border financial services in March 2019.”
Next, Mr Carney highlighted the high levels of unsustainable debt propping up the Chinese economy, with some estimates placing it as high as 328% of Chinese GDP.
This is a global problem because China is a significant creditor, freely lending money overseas, particularly for infrastructure projects.