Thursday, May 28, 2009
Something the FSA might have got right, they expect 50 % falls in house prices
LONDON, May 28 (Reuters) - Britain's financial regulator said the tests it uses to gauge banks' capital strength assume house prices will halve and GDP shrink 6 percent in the current recession, making it the country's worst for more than 60 years. Publishing details of its "stress tests" for the first time, the Financial Services Authority said they assumed unemployment peaking at 12 percent, and no growth in the economy until 2011. The tests also factor in a 60 percent peak-to-trough slump in commercial property values, outstripping the assumed 50 percent drop in residential prices.