By Gina Gomez
Mar 11, (THAINDIAN NEWS) Banks in the United Kingdom are going to find themselves amidst rigid stress tests with the aim of guaranteeing that it has the ability to withstand a much more severe onslaught of recession, which is likely to lead to escalating figures of unemployment.

The country’s financial regulator Financial Services Authority (FSA) has recently revealed that the new stress tests that the banks would be subjected to would be an important tool to judge whether the financial institutions of the country would be able to endure another 2.3 per cent fall in the Gross Domestic Product from now till the end of the next year. While revealing FSA’s financial outlook risk for the year, Lord Adair Turner, the chairman of the financial regulator has emphasized that the banks would be compelled to put the maximum share of the earnings to give an impetus to the economy before the financial institutions pay for dividends as well as the bonuses. It has been revealed that according to the new stress tests, the banks would be evaluated against a peak-to-trough fall in GDP of 8.1 per cent by 2014 and an unemployment rate of 13.3 per cent.

Meanwhile, the stress tests were taken into account in the wake of the financial crisis, to make sure that the banks are economically stable to continue operating despite unfavorable economic scenario. The stress testing that was held last year, ensured that banks in the United Kingdom could endure a peak-to-trough GDP plunge of 6.9 per cent, increase in unemployment by 12.54 per cent as well as reduction in prices of residential property by 50 per cent.