A third of UK small businesses highly indebted, says Bank of England

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The Bank of England said on Friday that one-third of UK SMEs were in more than twice as much debt as before the Covid-19 pandemic, and that companies could go bankrupt by the end of the year. I warned.

Increasing debt levels among small and medium-sized enterprises (SMEs) were revealed in a report issued by the Bank of England, along with the latest quarterly financial stability information. The analysis warned of the potential impact of increased risk-taking in some markets and urged banks to take a “cautious and cautious approach” to digital assets such as cryptocurrencies.

According to the central bank, many SMEs have never borrowed before and some may not meet pre-pandemic lending standards, with 79 billion UK corporate debt from the end of 2019 to the first quarter. It accounts for two-thirds of the pound’s increase.2021 as the blockade left them fear For their future.

According to a survey, 33% of SMEs held debt levels that were more than 10 times their cash balance, compared to 14% before the Covid-19 hit. The proportion of people with high debt compared to both cash balances and monthly inflows tripled from 3% to 10% over the same period.

“Debt looks affordable in the short term, but bankruptcy is likely to increase from the fourth quarter of 2021 as government support is withdrawn as planned,” said the BoE’s Monetary Policy Committee. Said that the high delinquency did not pose a “significant risk” to British wells. -Capitalized banking sector.

The UK’s temporary dismissal system to assist employees expired at the end of September, and the most generous government-sponsored loan known as the “bounce back loan” was replaced by a collection loan system in March.

The BoE described the risk to the financial sector from the fast-growing crypto asset market as “limited,” but added that regulations need to be developed quickly to address potential future instability. I did.

The leveraged drone market was also raised as a concern, and the BoE cited them as areas where global investors are taking “higher levels of risk”.

“The risk of the leveraged drone market continues to rise globally,” said BoE. “Some investment banking businesses continue to show signs of increased underwriting standards and increased risk taking.”

European Central Bank warning Last summer, we decided to take “supervisory measures” against banks that were taking too much risk with leveraged drones.

BoE also updated financial institutions That plan Strengthen rules for retaining data using cloud computing platforms from technology companies such as Amazon, Microsoft, and Google.

Central banks are considering “additional policy measures”, including “appropriate frameworks for designating specific third-party service providers as important,” to limit the risk of these arrangements. Resilience Criteria; and Resilience Test “.

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