The Bank of England warns: interest rates are putting pressure on British companies
08-23-2023 12:13 AM
The Bank of England warned, on Tuesday, that high interest rates increase pressure on British companies, which increases the risk of companies defaulting and threatens investment and employment.
An analysis published on the bank’s blog showed that the percentage of non-financial companies in the United Kingdom that suffer from debt service pressures will rise from 45% in 2022 to 50% by the end of this year, which is the highest percentage recorded since the global financial crisis in 2009. It is Among medium-sized companies, 70% of them will suffer from debt servicing pressures, according to Sky News.
The authors warn that “defaults can directly increase financial stability risks by reducing lenders’ flexibility, while sharp declines in investment and employment can indirectly affect financial stability by amplifying the overall economic downturn.”
The Bank of England raised interest rates by 0.25 percentage point to 5.25%, the highest level since early 2008, with the aim of fighting inflation, which is expected to continue despite its decline in recent months.
“Some critical indicators, including wage increases, point to further persistent inflationary pressures,” the central bank said. The (Monetary Policy) Committee decided at this meeting to raise interest rates for the fourteenth time in a row.
agencies
The Bank of England warned, on Tuesday, that high interest rates increase pressure on British companies, which increases the risk of companies defaulting and threatens investment and employment.
An analysis published on the bank’s blog showed that the percentage of non-financial companies in the United Kingdom that suffer from debt service pressures will rise from 45% in 2022 to 50% by the end of this year, which is the highest percentage recorded since the global financial crisis in 2009. It is Among medium-sized companies, 70% of them will suffer from debt servicing pressures, according to Sky News.
The authors warn that “defaults can directly increase financial stability risks by reducing lenders’ flexibility, while sharp declines in investment and employment can indirectly affect financial stability by amplifying the overall economic downturn.”
The Bank of England raised interest rates by 0.25 percentage point to 5.25%, the highest level since early 2008, with the aim of fighting inflation, which is expected to continue despite its decline in recent months.
“Some critical indicators, including wage increases, point to further persistent inflationary pressures,” the central bank said. The (Monetary Policy) Committee decided at this meeting to raise interest rates for the fourteenth time in a row.
agencies