BoE warns of risks to UK businesses from private equity bubble

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The Bank of England is probing how UK businesses would be hit by the reversal of a long-running private equity boom, officials said, as they escalated warnings about leverage, transparency and valuations.

The BoE’s financial policy committee, which monitors risks to financial stability and develops policies to offset them, said: “Finance for riskier corporates could be particularly vulnerable to a significant deterioration in investor risk sentiment.”

It said that the likelihood of a “sharp correction” in some markets had increased since December as prices rose despite a cloudy outlook.

Officials added they would examine the relationships between private equity firms, which are facing higher borrowing costs, and the UK companies that depend on them for funding. The BoE will update on the work in June.

This is a developing story