The Bank of England is now warning of a market crash

The FTSE 100 and S&P 500 are near record highs. The real economy is deteriorating. And the Bank of England's Deputy Governor for Financial Stability, Sarah Breeden, has now said publicly what most politicians will not: a stock market crash is coming, and the financial system is not ready for it.

This crash could be worse than 2008 because of overvalued stock markets, the AI bubble, an overexpanded and at-risk shadow banking system and the Iran energy shock, which the International Energy Agency is calling the biggest energy shock in history.

If any of these risks crystallise simultaneously, and Sarah Breeden thinks they might, then the result will not be a market correction. It will be a financial crisis that will result in falling confidence, rising interest rates, frozen lending, job losses, and a domino effect through the real economy.

Governments must act now to plan for this eventuality and not after any crash happens. Contingency plans must exist, and nothing appears to be being done as yet.

If ever there was a moment to worry, even the Bank of England is saying this is it.

Take a look at the poll below: https://www.youtube.com/post/UgkxIGDlc45uxuP2Ty7jqNYpwIbOvwEjijHk

00:00 — Introduction: Warning signs of an imminent stock market crash
00:50 — Markets vs reality: record highs despite economic deterioration
01:40 — Bank of England warning signals and significance
02:20 — Sarah Breeden on overvalued markets and rising risks
03:10 — Disconnect between asset prices and real-world economic threats
04:00 — Key risks: war, credit markets, and AI-driven speculation
04:50 — Global context: energy shocks and warnings from International Energy Agency
05:40 — Tech bubble concerns and comparisons to the dot-com crash
06:20 — Shadow banking and the growing private credit market risk
07:20 — Domino effects: from market crash to wider financial crisis
08:10 — Global vulnerability and limits of central bank control
08:50 — Conclusion: need for preparation, regulation, and contingency planning


TRANSCRIPT
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ABOUT RICHARD MURPHY
Richard Murphy is Emeritus Professor of Accounting Practice at Sheffield University Management School. He is director of Tax Research LLP and the author of the Funding the Future blog. His best-known book is ‘The Joy of Tax’.

This video was edited by Thomas Murphy.

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