BoE Sounds Alarm over Potential Reversal of Private Equity Boom, Promises Further Research to Support UK Businesses

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The financial policy committee of the Bank of England (BoE) has expressed concerns about the potential impact on UK businesses if there is a reversal of the long-standing private equity boom. Officials have highlighted issues such as leverage, transparency, and valuations in private markets, which they believe are contributing to the challenging risk environment.

The BoE has also noted that there is an increased likelihood of a sharp correction in some markets as prices continue to rise despite uncertainty in the economic outlook. According to officials, private equity firms and UK companies that rely on them for funding could be particularly vulnerable in such a scenario. This includes companies with higher borrowing costs due to their increased reliance on private equity financing.

To address these potential vulnerabilities, the BoE has promised to conduct further research on the connections between private equity firms and the companies they fund. This research aims to help identify areas where improvements can be made in order to promote greater stability and resilience in the financial system.

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