Bank of England warns higher rates could lead to corporate defaults

Added pressure to repay debts

Rising interest rates mean British companies face added pressure to repay debts and a higher risk of corporate defaults, the Bank of England has warned.

In a new post on the central bank's blog, it warned that higher debt servicing costs may lead to defaults or the need for firms to suddenly reduce investment and employment. The share of non-financial UK companies under this stress — those with a low ratio of earnings to interest expenses — will rise from 45% in 2022 to 50% by the end of this year, according to the blog. This figure rose to 70% for medium-sized companies. Bank of England's Huw Pill: Monetary policy tightening 'is working' - reports The post said: "Higher interest rates are putting pressure on indebted corporates th...