Bank of England warning on debt crisis

THE UK is only "partially insulated" from the escalating eurozone debt crisis, the Bank of England has warned today.

In its latest Financial Stability Report, the Bank said there was uncertainty about the impact Europe's sovereign debt woes could have on Britain's financial sector. Banks could strengthen themselves by holding on to profits and cutting back on dividends and bonuses, it added.

Greece and Ireland have accepted multibillion-pound bailouts from the European Union and International Monetary Fund, and there are fears countries such as Portugal and Spain will follow in their footsteps.

The report said: "The UK is only partially insulated given the interconnectedness of European financial systems and the importance of their stability to global markets." Tighter EU rules insure against the risks, the report said.