Bank of England holding emergency talks amid deepening crisis at Credit Suisse

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The national flag of Switzerland flies in front of the headquarters of the Swiss bank Credit Suisse in Zurich – REUTERS/Arnd Wiegmann

One of Europe’s biggest banks sparked global market turmoil yesterday amid fears that it brink of financial disaster,

The Bank of England was holding emergency talks with international counterparts last night amid a growing threat of a possible financial disaster at one of Europe’s biggest banks.

Growing fears of a new crisis have prompted financial experts to begin re-evaluating economic growth forecasts, with some predicting that central banks will soon have to start cutting interest rates.

Swiss authorities were forced to show support after shares in Credit Suisse plummeted fell up to 30 percentFear is spreading throughout the city of London which is shadowed Jeremy Hunt’s first budget,

Credit Suisse appealed for a public show of support from the Swiss National Bank. A joint statement with the country’s financial watchdog on Wednesday night said Credit Suisse’s financial position was in line with the standard.

But he said the bank would be supported: “If necessary, the Swiss National Bank will provide liquidity to Credit Suisse.”

Bank of England officials were holding talks with counterparts as they all rushed to assess the potential impact of the problems at Credit Suisse, a “systemically important” institution that is involved in the global financial system.

Experts predicted bailouts would be needed to prevent a collapse that shook banks and around the world.

Stock markets declined at the beginning of the day increased anxiety as,

The FTSE 100 sank nearly 4pc as banks and asset managers were abandoned by investors. Insurer Prudential lost more than 12pc of its valuation while Barclays fell by 9pc.

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Meanwhile, both Shell and BP fell more than 8 per cent. Memories of the 2008 financial crisis and its aftermath caused oil prices to fall more than 5pc and fueled fears of a global economic recession.

This was in stark contrast to the picture of crisis recovery the Chancellor attempted to paint as he unveiled forecasts from the Office for Budget Responsibility that the UK would avoid recession this year.

The chancellor said the bright outlook was “proving the doubters wrong” as the latest projections showed inflation falling to 2.9 percent by the end of the year.

Mr Hunt said the economy was now “on the right track”, after the Office of Budget Responsibility (OBR), the government’s tax and spending watchdog, said any decline would be “lesser and shallower” than predicted just four months ago. Will happen.

However, senior economists warned that the collapse of Credit Suisse undermined Ukraine’s ability to recover from the double shocks of the pandemic and the war.

Nouriel Roubini, nicknamed Dr. Doom for correctly predicting the financial crisis, described the crisis surrounding Credit Suisse as a “Lehman moment” for European and global markets.

He said the bank was “too big to fail and too big to save”.

“An economic and financial hard landing has been my baseline for more than a year. Now it is clearly inevitable,” he said.

While the economy is still expected to shrink by 0.2pc this year, the OBR no longer believes it will enter a technical recession – defined as two straight quarters of economic decline.

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Its previous forecast had shown a decline of 1.4pc and predicted a recession lasting more than a year.

However, the OBR said Britain’s tax burden continues to hit a new record after the war.

The decision to freeze the income tax range until 2028 is expected to push around six million people into higher tax bands. Andy King, a member of the OBR’s executive committee, described Mr Hunt’s tax raid as a “fiscal drag on turbo chargers”.

The OBR also warned that households still face the biggest two-year reduction in living standards on record.

Tory MPs warned the party was at risk of losing the next election.

Simon Clarke, former chief secretary to the Treasury and co-chair of the influential Conservative Growth Group, said: “I don’ think it is a good place for a Conservative government to have the highest tax burden since World War II.

“Everyone knows that the country has gone through difficult times, the government spent huge amounts of money first on Covid and then on the Ukraine invasion.

“But we urgently need to have a more conservative position on tax. There is a risk that voters will not understand how a conservative government would make their lives better.

investors have become more Worried about the global banking sector Following the collapse of Silicon Valley Bank (SVB) and Signature Bank in the US last week.

Credit Suisse has bounced from one crisis to another over the past two years, but its problems intensified on Wednesday after its biggest shareholder refused to infuse more cash into the beleaguered bank.

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Ammar Al Khudairi, president of the Saudi National Bank (SNB), said his company would not invest further capital in Credit Suisse for regulatory reasons.

Bets that the scandal-hit lender will default on its loans rose to a new record high following the comments.

Earlier this week, Credit Suisse added to the concerns swirling around the sector after it admitted weaknesses in its financial reporting controls.

It also said that customers continued to withdraw money from the bank even after several costly and damaging scams.

The bank’s chief executive Ulrich Körner told Swiss media on Wednesday, “We are a strong bank. We are a global bank under Swiss regulation. We meet all regulatory requirements and basically observe them. Our capital , Our liquidity base is very strong.”