The Financial Services Authority (FSA) has published details of its âstress testâ for banks, which assumes that house prices will halve and unemployment will peak at 12 per cent. The FSAâs stress test applies fictional economic scenarios to see how banksâ balance sheets would cope, and the current stress scenario depicts a recession carrying on for at least a further year and a half, a 6 per cent shrinkage in the economy from peak to trough and an increase of an additional 1.5 million people losing their jobs. The FSA is keen to stress that the test is not a prediction.
