STOCK markets across the world plunged today amid growing fears China’s monstrous debt bubble is about to burst and trigger a devastating financial crisis.
Investors are becoming increasingly nervous the world’s second-largest economy is about to trigger a crash, which could be worse than the stock mayhem witnessed at the start of this year and last August.
China has been taking on yet more debt in what is thought to be a bid to combat its economic slowdown.
The Asian country’s deficits reached 237 per cent of GDP in the first quarter of this year, from 148 per cent at the end of 2007, according to the Financial Times.
The Bank of England is to impose a series of tests on major UK banks to establish whether they are able to withstand a dramatic slowdown in China, a contraction in the eurozone, the worse deflation since the 1930s along with a fall in UK interest rates to zero.
The Co-operative bank – which failed last year’s tests – is no longer included in the annual assessments of the industry’s financial strength as it is too small, leaving six banks and the Nationwide building society to be tested. Continue reading