Bank of England: most companies will be able to withstand the consequences of trade conflicts

British companies generally remain resilient to external economic shocks, including trade wars and rising borrowing costs. This is stated in the latest report of the Bank of England on financial stability.

According to the regulator, even with a 10% drop in profits and a sharp rise in the cost of loans, most companies will be able to service their debts. Although vulnerable enterprises provide about 60% of jobs, they account for only 30% of corporate debt.

The Bank of England points to the continuing high risks associated with geopolitics and fragmentation of global trade. These threats are particularly relevant for the UK's open economy with a developed financial sector.

The overall outlook for households and businesses remains positive, and only large-scale macroeconomic shocks can significantly affect debt sustainability indicators.

The Central Bank also reported that the banks' capital is at an acceptable level. However, the Financial Policy Committee intends to review the capital requirements, as the last assessment was conducted five years ago.