The Chancellor Jeremy Hunt said UK banks were stronger and better placed to withstand a crisis as he defended the actions of Swiss politicians and regulators in rescuing the beleaguered Credit Suisse bank.

Mr Hunt said he had been told by the Bank of England and the Prudential Regulation Authority that there were no risks to the UK banking system during discussions about the rescue of the UK arm of the collapsed Silicon Valley Bank.

He told the House of Lords Economic Affairs committee: “I was reassured there was no systemic risk to the UK financial stability that they detected.

“Of course there is volatility in the market, we recognise that, but we also believe we are in an immensely stronger position than we were pre-2008 [financial crisis]. We do believe there is resilience in the system that there wasn’t then.”

He said the Bank of England stress tests showed that the system is resilient.

“I think we have to recognise that we are undergoing a period of change as we move from a period of extremely low interest rates to a period of higher interest rates,” the Chancellor added. “And that is causing, globally, adjustments that have to be made and we have to remain vigilant.”

Mr Hunt said he “wholly supported” decisions made by Swiss authorities to allow the takeover of Credit Suisse by rival Swiss UBS Group, adding that he believed they “took the right decision and we had the best possible outcome”.

The Chancellor was asked if he was troubled by the fact holders of specific bonds in Credit Suisse suffered $17bn (£13.9bn) losses after Swiss regulators overruled normal conventions that bondholders took precedence over shareholders in order to complete the Credit Suisse deal.

“I think it is a situation in which there is no obvious solution which doesn’t involve some compromises and I wholly support the decisions made by the Swiss authorities.”

He defended the Government’s plans to roll back regulation to help the City of London recover from Brexit. “I don’t think the status quo is necessarily the right thing to do to maintain financial stability but that is not the same as saying we wouldn’t unlearn the lessons of the financial crisis,” he said.

“I think the City is extremely resilient. At the time of Brexit there was a view it would suffer much more than it has. The fact we are prepared to adapt and change and rethink through the regulatory changes needed to keep it competitive is a measure of just how strong it is,” he argued;

He was speaking after data from the Office for National Statistics showed Government borrowing reached £16.7bn last month, £9.7bn more than in February 2022.

Mr Hunt said: “Borrowing is still high because we’re determined to support households and businesses with rising prices and… energy bills.

“What will bring these costs right down is lower inflation, which is why it remains one of our top priorities to halve it this year.”

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