The Bank of England is pushing for new tests so that City lenders can see how they would cope if an ‘extreme catastrophe’ was to plunge “Westminster under water”.
The boss of the Bank’s PRA (Prudential Regulation Authority), the UK’s financial watchdog Sam Woods told The Observer newspaper he is waiting for an opportunity to test the city’s resilience against “a very large climate event”.
“The one thing that we are going to need to test is what would happen if we had a very large climate event in the UK, or possibly another major financial jurisdiction,” he told The Observer.
He continued: “Imagine Westminster under water – a really extreme thing that made policy shift in a very dramatic way. I know there’s terrible climate events happening around the world all the time, but I’m talking about one that will lead to a dramatic change in policy from government, and governments and have a very sudden effect in financial markets.”
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This summer Europe experienced a major heatwave which led to fires in Greece, whilst an earthquake in Morocco and floods in Libya have afflicted North Africa.
Climate scientists fear that heatwaves, droughts, wildfires and floods could become more frequent, including in the UK.
The UK is also one of 32 countries that could risk being taken to court over its climate stance, following Rishi Sunak’s expansion of North Sea oil and gas drilling and his recent U-turn on net zero policies.
The new policy from the Bank of England comes after it came under fire from climate campaigners for failing to introduce capital climate regulation.
