Lagos — The United Kingdom has been hit so hard by the recession it now sits below developing countries like Nigeria and Panama in the financial stability rankings, says a report by the World Economic Forum.

Out of 55 global economies, the UK ranks 37th for financial stability, just above the US at 38th, according to the Forum's second annual Financial Development Report.

Overall, the UK claimed the top spot as the world's leading financial system, displacing the US, which dropped below Australia to third place, hampered by dire economic stability scores and a weak banking sector.

Kevin Steinberg, Chief Operating Officer at the World Economic Forum, warns that stability is the key issue, not overall scores:

"The United Kingdom and US may still show leadership in the rankings, but their significant drops in score show increasing weakness and imply their leadership may be in jeopardy."

Germany and France suffered a heavy fall in overall scores that pulled them out of the top 10.

Both countries slumped in the rankings, but held fast in terms of financial stability, achieving scores significantly higher than the UK and US, the report says.

Nigeria had recently embarked on a banking reform programme that necessitated the sack and replacement of the Chief Executive Officers of eight banks by the Central Bank of Nigeria (CBN). In a bid to save these institutions, which were said to be in "grave situation" liquidity wise, the banking watchdog also had to inject a total of N620 billion into them.All the 24 banks in the country underwent an audit text of which 14 passed, eight out rightly failed, while two others were asked to recapitalise by June next year.