There is relief in the City after UK banks passed stress tests on their ability to weather a double-dip recession.

Stress tests of 91 banks across Europe to gauge their ability to weather a new financial storm revealed seven failures, regulators said.

The Committee of European Banking Supervisors (CEBS) - the London-based umbrella body for Europe's financial regulators - carried out the tests on banks representing 65 per cent of total European banking assets.

The UK's "big four" - Barclays, HSBC and their part-nationalised counterparts Lloyds Banking Group and Royal Bank of Scotland - all passed the tests easily.

These banks have already been subjected to tough stress tests by the UK's Financial Services Authority (FSA) last year. The FSA said: "This resilience is a result of the considerable work that has been undertaken to strengthen UK banks in recent years."