The Financial Services Authority (FSA) published its Financial Risk Outlook 2006 on 25 January. It highlights the risks that the FSA believes will be most important in the next 18 months, for providers and users of financial services.
Although the FSA concurs with other forecasters that there will continue to be strong world economic growth, without substantial change to economic and financial stability, it believes "these relatively benign conditions are accompanied by large and growing imbalances which are in the long term unsustainable, and whose correction, if it were to occur in a rapid or disorderly manner, would pose risks."
Three possible sources of instability which could affect firms, markets, consumers and the FSA's own work are:
- a significant and sustained rise in oil pri...