Bank orders lenders to set aside billions for rainy day fund

For free real time breaking news alerts sent straight to your inbox sign up to our breaking news emails Sign up to our free breaking news emails Sign up to our free breaking news emails SIGN UP I would like to be emailed about offers, events and updates from The Independent. Read our privacy policy UK banks will need to set aside more cash to absorb shocks in the financial markets from next year, despite the Bank of England saying lenders are well placed to support households and businesses. The buffer – introduced in the wake of the financial crisis to ensure banks have a rainy day fund – was slashed to zero during the pandemic, releasing billions of pounds to help businesses and households. “Tighter financial conditions and reduced real incomes will weigh on debt affordability for households, businesses and governments in many countries, increasing the risks from global debt vulnerabilities,” the Bank said. “Commodity price volatility following the Russian invasion of Ukraine has further exacerbated price pressures facing households and businesses, and has had implications for the financial system.” The Bank said the proportion of households that will need to change their habits to be able to afford to pay their debts will not increase much this year.